Earlier this year, India took a major step toward giving its cash-driven economy a mobile payment spin. The country’s Reserve Bank of India (RBI) announced in April the launch of a new mobile-powered system called “Unified Payment Interface” (UPI), which is designed to facilitate money transfer through emails and text messages.
Just months later, the first UPI-based mobile payments apps are coming to the market.
Banking Technology reported that Flipkart-owned PhonePe and Yes Bank have launched one of the first UPI apps, allowing real-time, online bank payments via QR code-enabled addresses. The mobile app also offers additional security in the form of device fingerprinting.
Users can securely link their bank accounts to their mobile device and then authorize money transfers or merchant payments through a transfer mechanism maintained by the National Payments Corporation of India (NPCI). The funds are instantly transferred from one account to another, without the need to enter a one-time password for authentication. Yes Bank confirmed the transaction should take no more than 10 seconds to complete.
Abhaya Prasad Hota, managing director and CEO of NPCI, told The Times of India that, although UPI is seen as a person-to-person (P2P) payment mechanism, there are many powerful use cases for the new platform.
“Of all the channels, whether it is branch, ATM or internet, we would like to position the smartphone as the primary channel for day-to-day financial transactions,” Hota explained. “There are over 250 million smartphones, and they are growing at 30 million every year. This year, around 50 million smartphones are expected to get added. Besides P2P payments, UPI can be used for eCommerce.”
After Sept. 15, it’s expected that UPI will open up as an option for online payments, in addition to credit card, debit card and netbanking methods.
“A customer will be able to enter his virtual payment address under UPI. He will then get an alert on his mobile app and can authorize it immediately,” Hota stated, adding that UPI will soon act as a common payment gateway for all banks.