Unified Payment Interface (UPI)

13.04.2024

Unified Payment Interface (UPI)

Why in the news?                                                                                                                                     

     Recently the Reserve Bank of India (RBI) has unveiled two new features for Unified Payment Interface (UPI) users.

Important points:

• RBI Governor Shaktikanta Das announced these initiatives as part of the monetary policy statement, highlighting user convenience and their potential to drive adoption of digital payments.
• The initiative aims to streamline transactions and cash deposits.

Reserve Bank of India (RBI) has introduced two new facilities for Unified Payment Interface (UPI) users:

• UPI access to prepaid payment instruments (PPIs) through third party apps.
• Enabling UPI for cash deposit facility.

1.UPI Access to Prepaid Payment Instruments (PPIs) through Third Party Apps:

• This initiative by RBI aims to allow individuals to make UPI payments from prepaid payment instruments (PPIs) through third-party apps.
• Which expands customer convenience and promotes digital transactions for small value payments.
• This means users can now link their PPI wallet to third-party UPI apps to facilitate transactions seamlessly.
• Experts believe that this advancement will bring PPI at par with bank accounts for carrying out UPI transactions through third-party applications like PhonePe and Google Pay.

2.Enabling UPI for cash deposit facility:

• This initiative by RBI aims to enable cash deposits at Cash Deposit Machines (CDMs) using UPI, mirroring the existing UPI cardless cash withdrawal process.
• Currently, cash deposits in CDMs mainly depend on debit cards, but this new feature will eliminate the need for physical cards.
• The initiative simplifies cash deposit processes, converting them into card-less transactions.
• This will require users to only have UPI-enabled bank accounts to deposit cash in the CDM, thereby enhancing banking convenience and efficiency.

Unified Payment Interface (UPI):

• Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank).
• It merges multiple banking features, seamless fund routing and merchant payments under the hood.
•  It also caters to “Peer to Peer” collection requests which can be scheduled and paid as per requirement and convenience.
• Keeping the above context in mind, NPCI launched a pilot with 21 member banks.
• The pilot launch was done by Dr Raghuram G Rajan, Governor of RBI, in Mumbai on 11 April 2016.
•  Banks have started uploading their UPI enabled apps on Google Play store from August 25, 2016.

                                                         Source: PIB