UPI and UPI 2.0| ApnaPay

Digital revolution is the new ubiquity India is currently focusing on. As rightly said by Dilip Asbe, MD & CEO of NPCI, “We have a government that is focused on moving towards a digital or less-cash economy, the banks embracing technology to accelerate digital payments, proliferation of financial inclusion and superior customer services, and fin-tech innovators who are re-imagining solutions for our day-to-day problems and providing superior customer experience for Digital India Payments.” And because of these reasons, when it comes to e-payments and financial inclusion, India is giving cut-throat competition to other economies due to innovation.

What is UPI?

Unified Payment Interface, also known as UPI is an end-to-end payments framework propelled in India a while back on the principles of interoperability, consumer decisions and enduring partnerships between banks and fin-techs, utilising each other’s strengths and capabilities. It allows multiple bank accounts to be controlled in a single mobile application, providing several banking features, facilitating seamless & secure fund transfer and merchant payments on a single platform.

What is UPI 2.0?

UPI 2.0 is a level-up version of UPI payment system with improved features and additional benefits that facilitate smooth and instant fund transfer between two banks accounts without the need of beneficiary’s account numbers. It supersedes the former version which was structured mainly to facilitate peer-to-peer transactions with a platform that also accommodates merchant payments. It is being carried as a more secure and wide-ranging service with the easier authentication process.

Some Existing Features of UPI

  • Instant digital payments facilitated through a mobile phone, anywhere and anytime.
  • Accessing multiple bank accounts through a single mobile app.
  • Security of “Single Click Two-Factor Authentication”.
  • Virtual address providing incremental security and eliminating the need for providing card number, IFSC code, account numbers, etc.
  • Sharing the bill with others via the app.
  • Single Application for Merchant Payment and In-App Payments.
  • Complaint registration directly through the Mobile App.

Additional Features of UPI 2.0

Although UPI app is chock full of features, UPI 2.0 promises to be a better tool than its predecessor. Here are some of the new features introduced in UPI 2.0:

  • One-time Mandate:

This feature would allow customers to block a certain amount of funds from their bank accounts to pay for a product or service prior to availing it. This would help in ensuring that the customer has the necessary funds in their bank accounts at the time of availing the service. The allotted amount will be transferred on the committed date of the transaction. However, UPI mandate can be executed one time only.

  • Increase in Transaction Limit:

A great addition to the UPI 2.0 where the maximum transaction limit has been increased to Rs 2 lakh up from Rs 1 lakh in UPI. So now you can transact more money without any hassle.

  • Check on Speed of Transaction:

UPI 2.0 is hoping to include checks for UPI transactions. These checks are there to ensure that fraud transactions can be detected and hopefully prevented from finishing. Speed checks are utilised by few banks across India to give better security. Including this component to UPI 2.0 would enormously expand its reliability. Any suspicious or fraud transaction can be directly reported to the bank and the customer by the UPI app itself.

  • Signed intent and QR:

This feature is intended for customers to check the legitimacy of merchants while scanning QR code. It notifies the user with information to assess whether the merchant is a verified UPI merchant or not. This gives an extra level security. Customers will be informed in the event that the receiver is not secured, by a notifications, said NPCI.

  • Invoice in the inbox:

This feature is intended for customers to check the invoice sent by merchant before making the payment. This will assist customers with viewing and verifying the credentials and to check whether the invoice is received from the right merchant or not. Customers can pay subsequent to verifying the amount and other essential details mentioned in the invoice.

  • Linking of Overdraft Account:

Apart from current accounts and savings accounts, customers can now link their overdraft account to UPI. Customers will have the capacity to transact instantly and all benefits associated with overdraft account will be made accessible to the users. UPI 2.0 will fill-in as an additional digital channel to access the overdraft account.

Benefits of UPI & UPI 2.0

Benefits for the Customers:
  • Access to different bank accounts with single app.
  • Easy complaint raising via UPI App.
  • Gets an additional digital channel to access the overdraft account.
  • Can create a mandate for payments that are to be done later.
  • Gets to view the bill in the UPI app itself wherein he/she can verify the details and pay the invoice.
  • Customer will be assured of the receiver’s authenticity with signed intent/QR code received and will be informed if the QR is not secured.
Benefits for the Merchants:
  • Seamless transaction of funds from customers.
  • A larger pool of customers; those without debit/credit cards can also access Digital India Payment system.
  • No risk of losing fundamental customer info (for example, card number) to hacking.
  • Suitable for e-commerce transactions as well.
  • No more Cash-On-Delivery collections problem.
  • Easier for In-App Payment (IAP).

UPI vs UPI 2.0: How is UPI 2.0 better than the earlier UPI?

UPI 2.0 is a superior and a more brilliant version of the UPI framework supporting Digital India Payments system. It packs in a ton of new highlights that will make  UPI payments progressively thorough and advantageous. Innovative and new features of UPI 2.0 such as one-time mandate and linking overdraft account are steps in the right direction for offering need-based, short-term credit facilities. Also, the transaction limit for UPI 2.0 has been doubled from the earlier version of Rs 1 lakh to Rs 2 lakh.

Final words

The transaction volumes of UPI have grown 4.26 times from 145.463 million in December 2017 to 620.17 million in December 2018, while transaction values grew 7.8 times from ₹13144.3 Cr to ₹1,02,594.82 Cr in the same period. The number of banks live on UPI almost doubled from 67 in December 2017 to 129 in December 2018. “We have the potential and capability to do what China has done to build its digital economy, better and faster”, writes Asbe. Unlike China that operates mobile payments mostly under two players in a closed loop manner, RBI has always been clear from the start to set UPI as an interoperable system. Since the launch of UPI, the platform has emerged as a popular choice among users for sending and receiving money and thus, there is huge potential to harness UPI 2.0 for the advancement of next-generation digital India payments platforms in the future.