The UPI payment mode became been popular right from the time it has been introduced. The Unified Payment Interface became a convenient payment mode when the demonetization crisis had hit the market in the year 2016. But later on, it went on becoming the most preferred transaction mode among the masses. UPI is a cashless way of transacting money from your bank account. The payment is made by installing the UPI enabled payment app on your mobile and then linking it with your bank account. The process is quite simple and easy to use. Besides, it is also a secure way of payment since it generates a unique id and can be accessed by a password created by the user.
Recently, the UPI payment platform has hit the landmark of 1 billion transactions, a feat that is achieved three years after its launch. It has crossed 100 million users, making it the fastest mode of payment system in the world. National Payments Corporation of India (NCPI) that operates the UPI platform on achieving this milestone is planning to take this payment network on a global platform by enabling its acceptance in UAE and Singapore.
The usage method of UPI is quite easy and can be done hassle freely. As it is linked to the bank account, you can wire the money without feeding any bank details. All you have to do is scan a QR code or enter an email-like handle. The NCPI was launched by the RuPay network with the plan of promoting digital payments by harnessing the omnipresence of smartphones.
While most of the banks have become the part of the UPI network, and many have propriety apps, the open design of the UPI allows any bank account to be accessed from any UPI app. Currently, three main players, which include Google Pay, Paytm, and PhonePe, has dominated the market since customers of different banks use these apps largely and BHIM app for transactions. These three have done aggressive marketing for enrolling small and big merchants right from hawkers to big showrooms for accepting payment via UPI. It has also helped in waiving off merchant payment up to Rs 100.
The payment apps are backed by foreign investors and have been driving volumes and gained in terms of valuations, given the market potential. Walmart owns PhonePe, and according to Morgan Stanley’s report, it is now worth $7 billion. There is also a surge in the users of Paytm, which was the first wallet payment app that was launched in India.
According to NCPI officials, the four apps are 90% of the total volume on the app side. However, on the merchant acquiring side, it is a diverse set of banks, and fintechs are installing QR codes. The main target for the next three years will be to expand this 100 million user base to 500 million. It is anticipated that within the next two years, the merchant ecosystem shall get digitized, and the QR codes, which are 10 million now, will increase up to 30 million.
On making UPI global, it is still in the planning stage, and there are various permissions that need to be taken. It is believed that the collaboration between the fintechs and the banks that drove acceptance in India shall do the same globally as well. The QR code scan can be done anywhere in India and can debit money from an Indian bank account instantly. This payment model already exists in China with payment apps like Alipay and Wechat, which are also accepted in 30 other countries. However, these are closed-loop payments, and UPI can work with any bank account that you have.