NEW DELHI: India moves a step closer to becoming a cashless economy this month with the launch of unified payment interface (UPI), the brainchild of RBI governor Raghuram Rajan.
The application, a move that will
revolutionalise peer-to-peer payments and will be made available on the
Play Store for download, will help the track cash flow and collect tax accordingly.
The payments process which was launched by
Rajan on April 11 in Mumbai was in the final stages of integration and
testing with the banks and the National Payments Corporation of India
(NPCI), according to an ET report.
So, how does this work?
Built on the same infrastructure as the
Immediate Payment Service (IMPS), all that you need is a smartphone.
Once you register for UPI with your bank, a unique 'virtual address'
will be created. This is mapped with your mobile phone. The app will
allow users to pay for transactions as low as Rs 50 and go all the way
up to Rs 1 lakh. Payments can be made between friends, to merchants and
even to delivery boys instead of doing cash on delivery.
Cash on delivery, the big driver behind the ecommerce boom, will probably die a natural death for people with smartphones. They can use the UPI app to pay after receiving the goods.
All they need to know is the unique ID of the ecommerce firm.
The biggest impact of this app will be on
third-party payments. The UPI app does away with IFSC code and bank
account number and branch detail requirements, once UPI is in place.
You just need the receiver's unique ID. Open the UPI app, select the amount to be paid, add the unique ID of the beneficiary and select 'send'. The app will ask for a mobile pin to authenticate the payment.
You don't need an account with that specific
bank to be able to use its UPI app. All you need to do is to download
that bank's UPI app, register yourself and make the payment.
NPCI has been working on UPI since February
2015 under the guidance of Nandan Nilekani, co-founder of Infosys and
former chairman of the Unique Identification Authority of India (UIAI).
As of now, 29 banks are a part of the UPI
network, out of which 15 major banks have already integrated the
interface into their smartphone apps. These banks include ICICI Bank,
Axis Bank and few others. However, India's largest lender State Bank of
India (SBI) is yet to have an UPI app but they have said that they are
in the process of developing the application.
UPI can be used for grocery shopping at the
supermarket, or online shopping as well. It will eliminate the need of
entering card details such as number, expiry date, CVV code and OTP.
UPI decoded
1) UPI is integrated with your bank's app
2) Once you register, a unique 'virtual address' will be created, which will be mapped with your mobile phone.
3) You can pay for transactions as low as Rs
50 and go all the way up to Rs 1 lakh. Payments can be made between
friends, to merchants and even to delivery boys instead of doing cash on
delivery.
4) All you need is the unique ID of the ecommerce firm.
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