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How RBI’s new UPI mandate will enhance payment functionality?


The RBI on Wednesday opted to add the functionality of a single-block-and-multiple debit in UPI while presenting the December monetary policy. Ultimately, RBI will provide NPCI with specific instructions and guidelines. Accordingly, the new UPI functionality will enable users to block funds in their account, which can be debited at the time of need thanks to the RBI’s new UPI mandate.

Krishnan Vishwanathan, Founder and Executive Director, RING said “The RBI has made a mammoth effort in making UPI the predominant payment option for any and every transaction in India. QR code transaction, peer to peer payment through bank or phone numbers, online payment to a smallest tea stall to a fine dining restaurant – almost anything is possible using UPI. Having said that, there were a few used cases where traditional payment instruments like credit cards had an advantage. This new announcement completely democratizes UPI for credit and debit payments, removing any gaps in making it the preferred choice of payment for every purchase.”

“Perhaps the most pivotal aspect of today’s announcement is the integration of Single-Block-and-Multiple-Debits (SBMD) within the UPI framework. Essentially, SBMD allows users and merchants to decide on a certain limit to which a credit card may be authorized, making it convenient for customers and giving confidence to merchants. Now that UPI is capable of similar services, it is poised to increase its reach considerably making it the most popular mode of payment in the near future, in line with RBI’s vision. This almost puts UPI at par with a traditional credit card. So we are very positive about the development as it gives digital platforms like ours an opportunity to offer additional benefits to customer though UPI integration,” further added Krishnan Vishwanathan.

Utkarsh Sinha managing director Bexley advisors a boutique investment bank firm said “UPI is one of India’s most meaningful platform level innovations, and arguably almost as significant in the finance world as the development of TCP/IP protocol was for the internet. Naturally, non-bank FinTech companies have been the fastest to make use of it; RBI’s concern that banks have done little to develop consumer facing applications that exploit UPI is very valid. Most banking apps have UPI hidden in nested sub-menus, which makes them inaccessible for the public. There is soon for bank led innovation there.”

Akash Sinha, CEO & Co-founder, Cashfree Payments said “RBI’s announcement with respect to UPI payments and Bharat Bill Payment System (BBPS) are encouraging in the payments ecosystem. The RBI’s announcement around increasing the capacity of UPI by introducing single-block and multiple debits functionality, will enable users to block funds in their account, which can be debited at the time of need. This will make it more convenient to make payments towards investments in securities through the RBI’s Retail Direct platform and e-commerce transactions. RBI has been working towards boosting the efficiency and effectiveness of BBPS, to facilitate and accelerate the adoption of cashless payments and today’s announcement to expand its scope will further aid in increasing the accessibility for a wider set of individuals and businesses. India, as an economy, has already witnessed a rapid rise in the digital payments, logging 23.06 bn transactions amounting to 38.3 lakh crore in the third quarter this year. RBI’s recent efforts with respect to digital payments will certainly contribute towards the cashless economy imperative.”

Mr Atish Shelar, COO Ippo Pay technology said “RBI’s single block and multiple debit facility will bring more transactions from our day to day lives under UPI sphere. This helps only go deeper in an existing use case of ecommerce where UPI’s inroads are strong. This when seen in the light of ONDC will also help dramatically drive sales velocity for small merchants and will be critical for shaping payment and buyer behaviour in it.”

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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