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    'UPI 2.0 will miss a point if it omits recurring payments'


    ‘Standing instruction’ would enable recurring payments such as loan repayments to move on to UPI.

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    NPCI wanted to launch an upgraded version of UPI by March of last year.
    BENGALURU: The upgraded Unified Payments Interface, popularly called UPI 2.0, is mere weeks away from a formal launch, but with the Reserve Bank of India holding back the recurring payments feature on the platform, industry insiders are calling it a missed opportunity.

    Multiple bankers and top executives of payment companies ET spoke to said that while the upgraded version of UPI would enable multiple new use-cases, recurring payments on UPI through ‘standing instructions’ could have been a gamechanger.

    “‘Standing instruction’ would have enabled recurring payments such as loan repayments, mutual fund payments, and insurance premium payments to move on to UPI,” said a senior banker on condition of anonymity since the matter is under regulatory purview. “The other features are also big positives but recurring payments would have been the icing on the cake.”

    UPI 2.0 is expected to support merchant payments, allow merchants to block a certain sum from a customer’s account as security and debit it later, and double transaction limits, among other features.

    Another banker said there was hardly anything NPCI could do to change RBI’s stance.

    “(RBI) could be waiting for more data points around ‘standing instruction’ and its effects on payments… perhaps then it might reconsider its decision,” this banker said. NPCI launched UPI, the smartphone-based real-time bankto-bank payment railroad, in August 2016 with 21 banks onboard. Starting on a muted note post demonetisation, the platform grew manifold and now includes about 110 banks and handles more than 240 million transactions a month.

    NPCI wanted to launch an upgraded version of UPI by March of last year. After multiple additions of new features and delays, the Central bank cleared UPI 2.0 for general launch only last month.

    The bankers quoted above said specifications for the new UPI has changed multiple times hence some small banks might need more time to update their systems. But NPCI could go live with select financial institutions and add other players gradually, they said.

    “Enablement of ‘standing instruction’ could help collect loan payments, recurring bill payments, etc. At present, collection is a major pain point for the industry and UPI 2.0 could have been leveraged to address this problem. NPCI may look at further enhancement after the launch of UPI 2.0,” said Sachin Seth, fintech partner for Africa, India and Middle East at EY. Paytm senior vice-president Deepak Abbot said that armed with the latest updates, UPI should be handling more than three times the value of transactions presently flowing through the platform. UPI registered Rs 40,000 crore worth of transactions in June.

    “UPI monthly payments should go up to Rs 1.2 lakh crore within the next one year, close to the IMPS and NEFT numbers clocked by Indian banks,” said Abbot.

    If on one hand the payments industry is disappointed with RBI’s decision to hold the recurring payments feature, it is also preparing its systems to develop use-cases based on the new features of UPI 2.0.

    Paytm, which generates the highest volumes on UPI, is betting big on the block payment feature on the upgraded UPI.

    “You can book hotels, enable a block on your bank account through UPI, and then once your stay is over the hotel can debit the amount. This protects customer interest as well as the interest of business entities,” said Abbot.

    “Even gift cards could have a similar feature.”
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