RBI to introduce single-block-and-multiple debits functions in UPI. Details Here
RBI said, UPI has features that enable the processing of mandates for recurring transactions and single-block-and-single-debit functionality.
PremiumWhile announcing the December monetary policy, RBI on Wednesday decided to introduce the functionality of a single-block-and-multiple debit in UPI. This is expected to significantly enhance the ease of making payments in e-commerce space and towards investments in securities. RBI will release separate instructions to NPCI shortly.
In its statement on the development and regulatory policies, RBI said, UPI has features that enable the processing of mandates for recurring transactions and single-block-and-single-debit functionality.
Thereby, more than 70 lakh autopay mandates are handled every month and more than half of Initial Public Offer (IPO) applications are processed using the block feature of UPI.
Hence, RBI said that the capabilities of UPI can be enhanced to enable a customer to create a payment mandate against a merchant by blocking funds in his/her bank account for specific purposes which can be debited, whenever needed.
According to RBI, the development will be helpful for hotel bookings, the purchase of securities in the secondary capital market as also purchase of government securities using the RBI’s Retail Direct scheme, e-commerce transactions, etc.
Also, it will build a higher degree of trust in transactions as merchants will be assured of timely payments, while the funds remain in the customer’s account till the actual delivery of goods or services, it said.
Therefore, RBI said, "decided to introduce a single-block-and-multiple debits functionality in UPI, which will significantly enhance the ease of making payments in e-commerce space and towards investments in securities. Separate instructions to NPCI will be issued shortly.
Unified Payments Interface (UPI) has emerged as a popular retail payments system for Person to Person (P2P) and Person to Merchant (P2M) transactions.
Also, RBI has decided to expand the scope of BBPS to include all categories of payments and collections, both recurring and non-recurring in nature. This will make the platform accessible to a wider set of individuals and businesses who can benefit from the transparent and uniform payments experience, faster access to funds, and improved efficiency.
Anant Singhania, President, of IMC Chamber of Commerce and Industry said, the enhancements to the UPI and Bharat Bill Payments System are welcome and will help strengthen our digital prowess.
Dr. Jasmin Gupta, Co-founder & CEO, of LXME (neo-bank for women) said, "With capabilities in UPI further enhanced by introducing single block and multiple debit functionality, making payments in the e-commerce space and for investments in securities will become easy. The customer will be able to block funds in his/her bank account for specific purposes, such as hotel bookings, the purchase of securities, etc., that will be debited post-service or post-product delivery. The value-added feature will enable trust-building in person-to-person and merchant-to-merchant transactions."
Further, Gupta added, "With the expansion of the scope of the BBPS to include all categories of payments and collections, both recurring and non-recurring, such as education fees, professional fees, tax payments, rent collections, etc., the platform will get higher adoption from individuals and businesses. An important step towards scaling up the platform, thus ensuring a transparent and faster payment experience."
Also, Rajesh Mirjankar, MD & CEO, Kiya.ai expects the regulatory body’s decision to enhance the capabilities in UPI by introducing single-block-and-multiple-debits functionality will improve the efficiency of making payments.
In Swapnil Bhaskar, Head of Strategy, Niyo (neo-bank for millennials) view, the move will significantly improve customer convenience and the safety of their money.
RBI increased the repo rate by 35 basis points to 6.25% in December policy -- taking the key rate highest level since August 2018. With that, the repo rate has been hiked by 225 basis points so far in FY23.
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