Home / Money / Personal-finance /  UPI 2.0 offers limited payment options to users, says experts

New Delhi: After dominating the person-to-person (P2P) payments space, National Payments Corporation of India (NPCI) is aiming to expand the presence of Unified Payments Interface (UPI) in person-to-merchant (P2M) space with the launch of UPI 2.0. However, the upgraded version which was launched last week lacks features such as recurring payments which would have led to mass use cases, says experts.

The industry was looking forward to the ‘standing instruction’ feature that would allow recurring payments from the user’s bank account towards loan payment or bill payment after a specific interval, enabled by a one-time digital mandate. However, the desired functionality is not a part of the launched version, said chief executive officer of a payments solution provider, who did not wish to be named.

India has around 9 lakh crore worth of bill payments market which is still dominated by cash, added the person.

Last week, RBI governor Urjit Patel, State Bank of India (SBI) chairman Rajnish Kumar and Nandan Nilekani, the non-executive chairman of Infosys who is also the innovation advisor at NPCI, launched UPI 2.0 in Mumbai. The launch of the upgraded version of UPI came after a delay of several months.

Several features have been added to UPI 2.0, including an overdraft facility, which enables customers to link their overdraft account to UPI and carry out transactions instantly. The one-time mandate feature allows customers to pre-authorize a transaction and pay at a later date, while the invoice-in-the-box feature allows customers to check the invoice sent by merchants prior to making a payment. The signed intent and QR feature enables customers to check the authenticity of merchants while scanning QR codes.

“Invoicing is a good start for enabling P2M payments on UPI. However, standing instruction for recurring payments like utility bills will further boost UPI usage, once introduced," said Sunil Kulkarni, joint managing director at Oxigen Services (India) Pvt. Ltd, a mobile wallet and payment solutions company.

According to Vivek Belgavi, partner and leader for fintech at PwC India, UPI 2.0 has been created to serve as building block for creation of various useful applications. “The inclusion of overdraft account in UPI construct does create a few options for new product or services like complete digital on-boarding for merchants and users, and creating seamless credit solution," he said.

“Low cost merchant acquiring has been there since UPI 1.0. However, we still have to solve for merchant acquiring in a meaningful way," added Belgavi.

NPCI is the umbrella organization for all retail payments in the country. It also manages the UPI platform that facilitates instant fund transfer between two bank accounts on a mobile platform without requiring details of the beneficiary’s bank account.

Transactions through UPI received a major boost after Prime Minister Narendra Modi launched the BHIM app in December 2016. UPI was launched in April 2016.

BHIM UPI has recorded transactions worth Rs. 45,845 crore and 235 million in terms of value and volume in the month of July 2018, said NPCI.

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