Unified Payments Interface (UPI) is among the largest retail payment systems in the country. In November, there were 418 crore transactions worth around Rs 7.7 lakh crore on the home grown payments platform. The Reserve Bank of India has now proposed new measures that could give UPI further boost and bring in a whole new set of consumers on to the platform.
In the last few years, India has been among the fastest growing smartphone markets. But, there is still a large base of feature phone users. While there are close to 119 crore mobile phone users, only around 74 crore have smartphones. So, there is still vast market out there of feature phone users.
To deepen financial penetration, it is important to bring feature phone users into the mainstream digital payments, feels the Reserve Bank of India. Until now, feature phone users have had limited access to payment products. The National Unified USSD Platform, whereby feature phone users can avail basic payment services using the *99# code hasn’t yet picked up. Therefore, RBI proposes to launch a UPI-based payment product for feature phone users.
“In the first cohort of RBI Regulatory Sandbox, some innovators had successfully demonstrated their solutions for feature phone payments, under the theme of retail payments. These products, coupled with other complementary solutions, will facilitate UPI-based digital payment solutions on feature phones to promote wider digitisation,” the central bank said on Wednesday.
Experts welcomed the move.
“Facilitating UPI-based digital payment solutions on feature phones will promote wider digitisation, offering a quantum leap in driving small value transactions especially in the tier II, tier III markets,” said Mandar Agashe, founder and vice-chairman of Sarvatra Technologies, a banking technology provider.
It will boost the acceptance of digital payments and boost financial inclusion, said Ankit Bhatnagar, head of products at Mswipe.
“This will not only benefit users in terms of flexibility and convenience, but also bring more small merchants into the digital economy, while strengthening the payments infrastructure in the country,” he said.
Acceptance of UPI payments through feature phones could open the doors for the common man to financial services like buy now and pay later, digital insurance and small ticket loans, said Bipin Preet Singh, co-founder and CEO of MobiKwik.
The Reserve Bank is also looking to simplify the process flow for small value transactions over UPI.
Transaction data analysis shows that 50 per cent transactions through UPI were below Rs 200. These low value transactions utilise significant system capacity and resources, at times leading to transaction failures, according to RBI.
It has therefore proposed to offer a simpler process flow by enabling small value transactions through an on-device wallet in UPI app which will conserve banks’ system resources, without any change in the transaction experience for the user.
Furthermore, it has also been proposed to raise the transaction limit for UPI payments for IPO applications and for the retail direct scheme (where retail investors can invest directly in government securities) to Rs 5 lakh from Rs 2 lakh.
UPI is also a popular payment option for subscribing to IPOs and this move by the RBI to enhance the transaction limit will further fuel the use of UPI by retail investors and make digital payments more inclusive, said Anand Kumar Bajaj, founder and CEO of fintech PayNearby.
