Only six years old, UPI is already the most popular way of online transactions in India. Last month, over 6.57 billion transactions were carried out by this mobile electronics payments system. It is gearing towards boosting its growth further.
UPI was built by a coalition of banks in an attempt to challenge card companies. It brought millions of people under its wings to encourage digital payments and curb corruption.
At a conference held on Tuesday afternoon, the governor of the Reserve Bank of India, Shaktikanta Das, said, “During the period between March 2020 and August 2022, UPI usage grew by 427%.” He added, the RBI is preparing to expand UPI to “several nations in Asia and the Middle East and other parts of the world,” and that an international subsidiary is being set up.
Das enthusiastically but being cautious at the same time said, “UPI has emerged as the pride of the nation… It’s one area where I think India can play a major leadership role in the world in the days to come. It’s a phenomenal product, but we need to be extremely watchful of its infrastructure as it scales.”
Das claimed on Tuesday that UPI has released two new offerings- One would expand the usercase and the other would help it to scale up. A lighter version of UPI known as UPI Lite is made available in India recently with eight banks, including SBI, Kotak, and SBI. Executives at the conference on Tuesday said that UPI Lite processes payments below $ 2.5 or ₹ 200. It should be able to lower the burden of infrastructure on banks.
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UPI still encounters challenges concerning its success rate despite all its growth. UPI Lite will handle the settlements in a slightly different way than UPI. For instance, an FAQ states, “You will receive SMS once a day for UPI LITE Transactions from your Issuing Bank containing history of Transactions carried out during the day.” It seems to be working in a near-offline mode.
The National Payments Corporation of India, stated, “UPI Lite will provide users with a convenient solution for faster and simpler low-value transactions.” The NPC is a special unit of the RBI that oversees UPI.
Talks about UPI to link with credit cards
RBI also has its plan in progress to link UPI to credit cards. The governor of RBI said Indian Bank would be the first to issue Rupay Credit Card that would link to UPI. The executives said that with the additional support of UPI on top of credit cards, the RBI is ensuring the influx of applications of newer payment systems. It would increase the opportunities for people to use their credit cards and build credit scores.
Analysts at Goldman Sachs wrote, “This could potentially increase credit card penetration and expand the scope of digital payments in India, positively impacting both card companies (such as SBI Cards) and fintech platforms (such as Paytm).”