Introduction of UPI
success story of upi
UPI, which stands for Unified Payments Interface, is a real-time payment system developed by the National Payments Corporation of India (NPCI). It was launched in 2016 with the aim of providing a simple and secure way for people to make digital payments in India.
UPI enables users to transfer money instantly between bank accounts using a mobile phone or a computer. It eliminates the need for bank account details or IFSC code, making the process of making payments faster and more convenient. With UPI, users can make payments for a variety of services such as mobile recharges, utility bill payments, online purchases, and even in-store payments using a mobile device.
One of the key features of UPI is that it allows users to link multiple bank accounts to a single UPI ID, making it possible to switch between different accounts seamlessly. Additionally, UPI supports biometric authentication, which provides an added layer of security for transactions.
Since its launch, UPI has witnessed explosive growth in India, with millions of users adopting the system for their daily transactions. UPI has played a significant role in promoting financial inclusion and digital transactions in India, and it has become a critical part of the country’s digital infrastructure. As of September 2021, UPI had over 3.57 billion registered users and had processed over 4.2 billion transactions worth over Rs. 8.7 trillion in a single month.
UPI – Overview
| Product | instant real time inter bank |
| type | payment system |
| owner | national corporation of india |
| produced by | national corporation of india |
| country | India |
| introduced | 2016 |
| website | www.npci.org.in |
about – UPI
UPI stands for Unified Payments Interface, and it is a real-time payment system developed by the National Payments Corporation of India (NPCI). It allows users to transfer money instantly between bank accounts through a mobile phone or a computer, without requiring any bank account details or IFSC code.
UPI has revolutionized the way people in India make payments, making it faster, easier, and more convenient. With UPI, users can make payments for a variety of services such as mobile recharges, utility bill payments, online purchases, and even in-store payments using a mobile device.
UPI also allows users to link multiple bank accounts to a single UPI ID, making it possible to switch between different accounts seamlessly. Additionally, UPI supports biometric authentication, which provides an added layer of security for transactions.
Overall, UPI has been a game-changer for the Indian payment industry, promoting financial inclusion and digital transactions. As of September 2021, UPI had over 3.57 billion registered users and had processed over 4.2 billion transactions worth over Rs. 8.7 trillion in a single month.
business model revenue model of of UPI
The business model of UPI revolves around providing a platform for banks and payment service providers to offer digital payment services to their customers. The National Payments Corporation of India (NPCI), which developed UPI, charges a nominal fee for each transaction processed through the system.
Here’s how UPI generates revenue:
Transaction fees: NPCI charges a nominal fee from banks and payment service providers for each transaction processed through UPI. The fees charged are based on the volume of transactions processed, and they are typically lower than what banks and payment service providers would have to pay for traditional payment methods like credit and debit cards.
Interchange fees: In addition to transaction fees, NPCI also generates revenue from interchange fees. When a user makes a transaction through UPI, the bank or payment service provider issuing the debit card pays an interchange fee to the bank or payment service provider of the merchant receiving the payment. NPCI collects a portion of this interchange fee as revenue.
Value-added services: NPCI also generates revenue by offering value-added services such as UPI QR codes and UPI-based bill payments to banks and payment service providers. These services help them to offer a better customer experience, and NPCI charges a fee for each service provided.
Overall, UPI’s revenue model is based on generating revenue from transaction fees, interchange fees, and value-added services. By providing a platform for digital payments, NPCI has been able to generate revenue while promoting financial inclusion and digital transactions in India.
UPI marketing strategy
UPI’s marketing strategy primarily focuses on promoting the benefits of using digital payments and positioning UPI as a secure, convenient, and reliable payment system. Here are some of the key elements of UPI’s marketing strategy:
Partnerships with Banks and Payment Service Providers: UPI has partnered with several banks and payment service providers to promote the use of UPI for digital payments. These partnerships help to increase the visibility of UPI and encourage users to adopt the system.
Advertising Campaigns: UPI has launched several advertising campaigns across various media channels to promote the benefits of digital payments and to create awareness about UPI. These campaigns emphasize the convenience, security, and reliability of UPI, and they target a broad audience, including both urban and rural users.
Social Media Engagement: UPI engages with users on social media platforms such as Twitter, Facebook, and Instagram to create a community of users and to address any queries or concerns they may have. The platform also uses social media to promote new features and services offered by UPI.
UPI QR Codes: UPI has introduced UPI QR codes as a payment option for merchants, which makes it easier for users to make digital payments. This feature has been extensively promoted through social media campaigns and partnerships with merchants.
Cashback Offers: UPI has also introduced cashback offers to incentivize users to make digital payments through the platform. These offers are promoted through various channels and are targeted at specific user segments.
Overall, UPI’s marketing strategy focuses on creating awareness about the benefits of digital payments and positioning UPI as a secure, convenient, and reliable payment system. The platform has leveraged partnerships, advertising campaigns, social media engagement, UPI QR codes, and cashback offers to promote its services and to drive adoption among users.
UPI vision and mission
The vision of Unified Payments Interface (UPI) is to provide a hassle-free and secure digital payment system to all Indians. The mission of UPI is to promote financial inclusion by enabling seamless and instant digital transactions across the country. Here are more details about UPI’s vision and mission
Vision:
To make digital payments a way of life for all Indians.
To enable instant and secure digital transactions across the country.
To provide a platform that is accessible to all, irrespective of their financial status or geographic location.
To contribute to the growth of the Indian economy by promoting digital transactions.
Mission:
To simplify digital payments for users by offering a seamless and user-friendly platform.
To promote financial inclusion by enabling access to digital payments for all, including those in remote areas.
To enhance the security and reliability of digital transactions through cutting-edge technology and robust security measures.
To facilitate the growth of digital transactions in India and support the government’s efforts towards a cashless economy.
Overall, UPI’s vision and mission are aligned towards promoting financial inclusion and driving digital transactions in India. The platform’s vision is to make digital payments accessible to all Indians, while its mission is to simplify the process of making digital payments and to promote a cashless economy.
Why UPI is Successful
UPI has been successful for several reasons, even without offering traditional reward points or cashback incentives. Here are a few possible reasons:
User-Friendly Interface: UPI has a user-friendly interface that allows people to transfer money easily and quickly. It does not require users to remember bank account details, which makes transactions more convenient and streamlined.
Convenience: UPI transactions can be completed within seconds, making it a convenient option for users who are always on the go. Users can initiate transactions 24/7 from anywhere with an internet connection, making it an incredibly accessible option.
Security: UPI transactions are secured with multi-factor authentication, including a UPI PIN and biometrics, making them safe and secure. This gives users confidence in using UPI for their financial transactions.
Government Support: The Indian government has been actively promoting the use of digital payments and UPI, which has helped to increase its adoption rate. This includes initiatives like demonetization and the Digital India campaign.
Overall, UPI’s success can be attributed to its ease of use, convenience, security, and government support. These factors have helped to establish it as a popular and trusted option for digital payments in India.
Unexpected growth of UPI
Amidst the COVID-19 pandemic in 2020-21, UPI experienced remarkable growth, with a surge in the number of transactions processed through the platform. The Indian government’s push towards a cashless economy and the need for contactless transactions during the pandemic played a crucial role in driving UPI’s growth. As a result, UPI has become a model for other countries to replicate. During the pandemic, UPI recorded over 2.2 billion transactions amounting to Rs 41 lakh crore. This surge in usage has also led to an increase in the adoption rate of UPI among the Indian public, thereby driving the overall adoption of digital transactions in the country. The graph below illustrates the year-on-year growth of UPI transactions since its inception.
UPI transaction volume is growing steadily
In March 2021, UPI transaction volumes reached 2,732 million, which was a remarkable 119% increase from the previous year. The transaction volumes continued to show unprecedented growth and reached 5,406 million by the end of the year, representing a 98% increase from the previous year. As of November 2022, UPI transaction volumes have further increased by 35% to 7,309 million from March 2022.
In addition to the impressive transaction volumes, there has been a significant rise in active UPI users. The following graph highlights the growth of active UPI users over time.
UPI users continues to grow
As of March 2021, the number of active users on UPI was 14 crores, which represented a 43% increase from the previous year. By March 2022, the user base had grown by 30% and reached 26 crores.
As of November 2022, there has been a further 15% increase in the number of active UPI users, which has reached 30 crores since March 2022.
India leads the world in digital transaction adoption
As per ACI Worldwide’s report, India recorded the highest number of real-time transactions (48 billion) last year, surpassing China which reported 18 billion transactions. This number was 6.5 times higher than the combined transactions recorded by the US, UK, Germany, Canada, and France. The significant growth in real-time transactions could be attributed to the increasing adoption of UPI-based QR code payments and mobile payment apps by merchants. The pandemic also played a crucial role in the growth of digital payments, contributing to India’s real-time payments capturing 31% of the total payment transaction volume last year.
Moreover, India is expected to reach a share of 70% of the total global payment volume by 2026, with a combined net savings of $92.4 billion for consumers and businesses.
UPI – the rocketship for innovation in the digital payments sector
The widespread adoption of UPI can primarily be attributed to its user-friendly interface and large user base. Its open protocol also allows for the integration of other innovations, leading to a more significant and efficient financial payment network than its competitors. By removing intermediaries and increasing competition, UPI has the potential to accelerate global payment technology innovation, similar to the intended impact of blockchain technology.
The Government of India has been promoting the digitization of the financial sector and economy, leading to the rapid growth of digital payment transactions in recent years. These initiatives are an essential component of the Digital India program and are designed to establish the digital payments ecosystem as a crucial player in the country’s financial landscape.
The use cases of UPI
| 1. | Travel | One-time mandate feature has made it possible for users to book tickets, taxis, and hotel room travel scheduled for dates in the future. |
| 2. | Financial Institutions (FIs) | Creating a credit profile by analysing data from UPI transaction history and OD facility usage for offering credit facilities. |
| 3. | eCommerce | It can successfully replace the cash-on-delivery payment option by allowing merchants to collect funds digitally at the time of delivery of goods. |
| 4 | Non-Banking Financial Companies (NBFCs) & Micro Finance Institutions (MFIs) | Creating mandates for UPI-based collections can be incentivised, which can significantly reduce payment collection costs. |
| 5. | Subscription | Using UPI-based mandates for blocking amounts towards DTH bill payments, streaming media subscriptions, quarterly school/gym fees, and more. |
| 6 | Healthcare | Providing more context to patients by enabling the sharing of pathology reports and medical observations at the time of successful payment collection. |
| 7. | Corporates and SMEs | Digitising B2B transactions by sharing digital invoices for purchases, collection requests, and periodic reminders. |
| 8. | Micro merchants | Increasing the use of low-cost QR-based payment acceptance at small mom-and-pop shops via signed intent. |
which countries is using UPI
Indian digital payment systems are available in Singapore, UAE, Oman, Saudi Arabia, Malaysia, France, BENELUX markets – Belgium, the Netherlands and Luxembourg – and Switzerland, among others. It is also understood that India has signed MoUs with 13 countries that want to adopt the UPI interface for digital payments.
Types of UPI
UPI 2.0
Unified Payments Interface (UPI) 2.0 is an upgraded version of the UPI payment system in India, which was launched in August 2018. UPI is a real-time payment system that facilitates inter-bank transactions by instantly transferring funds between two bank accounts on a mobile platform.
UPI 123PAY
UPI 123PAY is an instant payment system for feature phone users that allows them to safely and securely use the Unified Payments Interface (UPI) payment service. Feature phone users can conduct a variety of transactions based on four technological alternatives via UPI 123PAY.
FAQs
1. Who invented UPI?
The National Payments Corporation of India (NPCI), which was founded by the Reserve Bank of India (RBI) and the Indian Banks Association, developed the Unified Payment Interface (UPI).
2. What is UPI payment?
Unified Payments Interface
UPI full form is Unified Payments Interface. The first major step taken by India to achieve a cashless economy was the introduction of Unified Payment Interface (UPI). With the help of the new feature, your smartphone can be used as a virtual debit card.
3. Is UPI in USA?
The NPCI has enabled UPI transactions from mobile numbers including USA, UK, Singapore, UAE and Australia. Non-resident account types like NRE/NRO that have international mobile numbers will now be allowed to transact with UPI, according to a notice by the National Payments Corporation of India (NPCI).
4. Which is the first UPI app?
Pioneered and developed by National Payments Corporation of India (NPCI), BHIM has been conceived and launched by the Hon’ble Prime Minister of India, Narendra Modi on 30th December 2016 to bring in Financial Inclusion to the nation and a digitally empowered society.
5. Can UPI become global?
A whopping 74 billion transactions worth Rs 125.94 trillion were done using UPI in 2022. In what is a major push to taking India’s UPI global, the National Payments Corporation of India (NPCI) recently announced that NRIs or Non Resident Indians can soon start using UPI with their international mobile numbers.
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The Paytm Success Story – One Man’s Vision to Revolutionize India’s Payment Industry