Having different digital wallets for different e-commerce sites could well be a thing of the past. Now, you can have only one wallet, which is essentially your bank account, from where all payments could be made for any transactions.
And there is more. You do not have to key in your bank account number and the 11-character Indian Financial System (IFSC) code every time you transact with a new identity. “All you need is an e-mail like Unified Payments Interface (UPI) address,” said A.P. Hota, managing director and chief executive officer of National Payments Corporation of India (NPCI) – the agency which has developed this new platform that will inaugurated by Reserve Bank of India Governor Raghuram Rajan on Monday. “UPI makes the existing mobile based money transfer simpler.”
“In UPI, money transfer is possible in both send mode and collect mode. The present system of mobile payments offers only send mode. You can send money. But, one cannot pull the money from another account. Of course, approval from the person whose account will be debited, will be required to complete the transaction,” Mr. Hota told The Hindu .
A merchant or an individual can send a request to the UPI user for money which will be transferred after the user’s approval.
The difference with the present system is that, the person who is sending is not initiating the action.
Also, one does not need to add any beneficiary account, unlike while transferring money through Internet banking. There is a limit of Rs.1 lakh per transaction through the UPI platform.
One need not give a bank account number or any code to do a transaction. “Only using the virtual address of UPI, one can send money or allow someone to pull money,” Mr. Hota said.
The individual can either choose a static pin or a one time password to carry out transactions.
But the real game changer is that this would end the need to have different wallets for different e-commerce sites. Complete interoperability is what the UPI platform aims to achieve.
“One interoperability that we really establish is that, currently in the world of e-commerce, all the big players have their own digital wallet,” Mr. Hota said.
“In such a wallet, you have to load the wallet first to do a transaction. Instead of multiple wallets with multiple ecosystems, we create the bank account as the wallet. If all the players, integrate with UPI there is a higher degree of interoperability.”
There are about 35-36 wallets in the payments system, which the banking regulator has approved.
“All the e-commerce players have created their own payment ecosystem with their own wallet, like an island. It is not that islands are bad but at the same time they are not interoperable.
“How many wallets would you operate to navigate to various systems,” he said. So, will the wallets lose their relevance with the advent of UPI?
“Wallets brought lot of simplicity in the transaction. They have served a very important purpose. They will definitely recreate themselves with some novel feature,” Mr. Hota said.
