The Indian economy was largely dependent on cash and other conventional modes of payments, until 2016 when the UPI was introduced.
The Indian economy has covered the journey from the barter system to trade through gold and silver coins. Now, we can transfer money in a few seconds, at the tip of our fingers.
Every vendor has a scan code stuck on their windshield. Hence, Payments can be made by just scanning the QR code or by entering the phone number linked to the recipient’s bank account.
UPI is an instant real-time payment system developed by NPCI (National Payments Corporation of India) and regulated by RBI. It was developed to simplify, facilitate and democratize instant payments.
UPI 2.0 was launched in August 2018 which upgraded the services by enabling users to link their Overdraft accounts to a UPI handle. It also has an added feature of AutoPay facility for recurring payments.
FEATURES OF UPI
1)Instant payments possible (through Immediate Payment Service (IMPS) which is faster than NEFT), can be used 24*7
2)Any UPI client app may be used and multiple bank accounts may be linked to single app
3).2 factor authentication process
4) A user can also pay bills and make payments to merchants with the release of UPI 2.0. If you have recurring payments, you can also set up autopay
5) It has simplified transactions by making instant payments available 24 hours a day, seven days a week, It requires only a virtual payment address to make payments, thus the need for customers to enter bank details or other sensitive information each time they initiate a transaction is eliminated.
6) Interoperability between banks is a unique feature of UPI. A user doesn’t need to store money in a separate wallet for each app unlike e-wallets earlier.
IMPACT OF UPI
UPI has proved to be a boon for Indian businesses. New businesses have the opportunity to flourish because of digital transactions. It has helped create business for a lot of startups in India. UPI’s network allows banks, e-wallets, and payment service companies to link with the framework and create applications via a smartphone device. It also acts as a domain portal for payments.
UPI has opened up many doors for startups to develop creative ideas that can improve the consumer experience.
Merchant-client relationship has improved tremendously. Customers no longer have to store their payment details on the merchants’ side. It helps the small businesses to succeed because people generally don’t have trust in new startups.
UPI has helped to incorporate several unorganized industries into the system. The primary objective of the Indian government of launching UPI was to bring in more and more people under the fold of digitization.
Many unconventional users also started using the Digital payment system with the BHIM app which uses UPI. Since BHIM is easy to use and is regulated by the government itself, it has inspired trust even in those consumers who were hesitant to use the digital route while making payments, due to lack of digital literacy.
SCOPE OF UPI
Tens of thousands of businesses across hundreds of industries have seen the value of UPI autopay and have switched to it.Payment apps such as Phonepe, Google Pay, Paytm, and others have become integral part of our daily routines.
Consumer interest in purchasing non-essential goods on e-commerce platforms ,paying bills has surged as a result of the surge in UPI transactions. UPI Payments has had a significant impact on the Indian market, influencing consumer payment methods and e-commerce sites.
The government intends to deploy UPI to facilitate cross-border transactions. It also provides a robust risk management system in the event of fraud. UPI represents a country’s progressive vision as it moves toward a digital economy. The pandemic has also contributed significantly to India’s digital economy. UPI transactions are expanding at a fast pace and have a lot of room for expansion. And it has the potential to make a big contribution to India’s GDP.
Till now, you must have got the fair idea as to How UPI has changed Indian Economy.
The digital payment systems have driven the country to become one of the rapidly growing financial economies worldwide. The transformation is still in progress since the new economy requires a policy framework and authoritative system.
India has come a long way in the development of the digital economy. Industry experts await the new innovation and regulations that bridge the gaps in the Indian payment space.