UPI 2.0 Prepares For Mid-August Launch Sans A Key Feature
UPI 2.0 will launch in August, will not have recurring payments service
The second phase of the successful Unified Payments Interface (UPI 2.0) is set to launch close to the second week of August but without a key feature that many were looking forward to, two people in the know confirmed.
Banks and payment firms have been awaiting the updated version of UPI to push digital payments further. One feature that most believed would give UPI based payments another boost was the option to allow customers to set up recurring payments using UPI-based apps.
This feature is likely to be absent from the second version of the now popular payment interface.
The recurring payments service, which was expected to be part of the second phase was not included due to security concerns and because the National Payments Corporation of India (NPCI), which developed UPI, was not sure how the customers would accept it, said one of the two people quoted above.
Currently, customers can set up recurring payments to a merchant, such as an electricity provider or a telecom firm, after giving an electronic clearing service (ECS) mandate to their bank. It was expected that the same mandate could be introduced into UPI-based apps. However, this will not happen immediately, the person quoted above said.
NPCI declined to comment on the planned launch of UPI 2.0.
So What’s New?
While the withdrawal of the recurring payment service is a disappointment for many, UPI 2.0 will bring in other features.
The new version will offer the option of a ‘one-time mandate’. This would allow the customer to block a certain amount of funds from their bank account to pay for a service, prior to availing it, said the person quoted above. This would help in ensuring that the customer has adequate funds in their bank accounts prior to availing the service.
Including the one-time mandate service, UPI 2.0 will introduce five new services for customers.
- For non-resident Indians (NRIs), who would like to send funds quickly to family and others in India, inward remittances will be introduced.
- Banks will be able to provide overdraft facilities to customers against funds they hold in their savings bank accounts, through the improved payments interface.
- Customers will also be allowed to view invoices before they approve a transaction where a merchant has requested payments on UPI.
- NPCI will also offer a service to verify QR-codes produced by smaller merchants, to ensure that customers can trust these codes better.
Building On Early Success
UPI has been widely seen as a success, with both transaction volumes and values rising steadily.
The first phase of the platform was launched in April 2016 and got a fillip after the government decided to withdraw Rs 500 and Rs 1,000 currency notes out of circulation in November 2016.
Even after cash was adequately replaced, UPI volumes have continued to rise. Some of this has been due to cash-back schemes offered by prominent platforms like Flipkart-owned PhonePe.
As of June 2018, the NPCI recorded 24.6 crore transactions on the payments interface, with funds worth Rs 40,834 crore being transacted. This was higher than the 19 crore transactions where funds worth Rs 33,288 crore were transferred in May, the NPCI said.
Vivek Belgavi, partner and fintech leader, PwC India said that even with the first version of UPI, there is scope for more upside if more platforms build on the interface.
Even before UPI 2.0 comes out, it is important to note that the first phase gave payments service providers a platform to build their services on. Barring services like BHIM, Google’s Tez and WhatsApp Pay, there aren’t many UPI first platforms. There is much headroom to be used by these players to provide a completely new proposition.Vivek Belgavi, Partner and Fintech Leader, PwC India.