UPI-Based Payments Service

UPI-Based Payments Service

Subject: Science and Technology

Section:

Context- Meta’s instant messaging app WhatsApp has received clearance from the National Payments Corporation of India (NPCI) to add 60 million users to its UPI-based payments service WhatsApp Pay.

Concept-

• This will take the total permissible number of users on the platform to 100 million.
• As a result of this clearance from NPCI, WhatsApp will be able to add 60 million users to its UPI service and take on heavyweight rivals such as Walmart-backed PhonePe and Google Pay, which command a majority of the transactions that happen on UPI.

What does the move mean for other players in the UPI ecosystem?

• The NPCI has mandated that no platform should handle more than 30 per cent of total transaction volumes of UPI on a three-month rolling period basis.
• However, for bigger players like PhonePe, which commanded a 49 per cent market share in terms of value of transactions in March and Google Pay, which had a 35 per cent market share, it has allowed them time until the end of 2022 to comply with the directive.
• So, even as these players could continue commanding a significant market share till the end of this year, the increasing clearance to WhatsApp and the mandate for the others to restrict their share could result in a less skewed market.

About Unified Payments Interface (UPI):

• NPCI launched UPI with 21 member banks in 2016.
• It is an advanced version of Immediate Payment Service (IMPS)- round–the-clock funds transfer service to make cashless payments faster, easier and smoother.
• UPI is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood.
• UPI is currently the biggest among the National Payments Corporation of India (NPCI) operated systems including National Automated Clearing House (NACH), Immediate Payment Service (IMPS), Aadhaar enabled Payment System (AePS), Bharat Bill Payment System (BBPS), RuPay etc.
• The top UPI apps today include PhonePe, Paytm, Google Pay, Amazon Pay and BHIM, the latter being the Government offering.
• As part of an agreement, India’s UPI will be linked to Singapore’s PayNow.

National Payments Corporation of India:

• NPCI, an umbrella organisation for operating retail payments and settlement systems in India, is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007.
• It is a “Not for Profit” Company under the provisions of Section 25 of Companies Act 1956 (now Section 8 of Companies Act 2013), with an intention to provide infrastructure to the entire Banking system in India for physical as well as electronic payment and settlement systems.