Akash Gehani, Co-Founder of Instamojo: UPI – The WhatsApp Moment for Payments
With UPI being introduced as a mode of payment collection, the stage is set to witness a revolution very similar to the telecomm revolution!
November 15th, 2016
The growing bond between technology and finance has broadened the scope of fintech startups in India. The introduction of UPI early this year has not just changed the dynamics of fintech in India but has also tickled entrepreneurial imaginations to come up with innovative solutions.
Riding the wave of evolution in communication technologies – from carrier pigeons to emails to chat apps – today we are on the verge of a completely digitalized world.
We are witnessing a similar evolution in the world of trade.We have gone from barter to currency to credit notes to cards and digital wallets, The word around the block is that we are on the brink of a WhatsApp moment for payments in the form of emergence of a cashless economy It certainly presents a great opportunity, not only for Fintech startups but also for businesses at large. Driven by the scope that this transformation presents, we expect a lot of world-class innovation to emerge from India
With over 200 Mn smartphone users, India is set to overtake the US in no time. While we see a great leap in these numbers, the penetration of credit cards itself (which is the last big evolution in fintech industry) is extremely low. This makes it evident that India cannot rely on traditional payment systems and would need to come up with something that is designed specifically for our needs – simple, solo, & mobile.
UPI, the brainchild of NPCI, was set up by RBI and the Indian Banks Association as an umbrella organization for all retail payment systems in the country. The requirements for better penetration to happen is that the payment method should have:
– Convenience of use
– Multi-layered security
– Operational 24 x 7
With UPI, every individual and business gets a virtual payment address (VPA). This is a unique identifier, something akin to an email id – “firstname.lastname@example.org”. A user just needs to share his or her VPA, instead of remembering and passing on cumbersome information such as bank account numbers and IFSC codes. UPI takes care of 2- factor authenticationt is interoperable as you can sign up on any bank’s UPI app with any bank account, if your bank has enrolled for it. And because it is built on IMPS, UPI works 24 x 7. That’s right – real-time all day!
UPI aims to digitize payments and reduce the costs involved by not relying on networks built by card organizations. This could become the preferred method for all peer-to-peer payments, and for customer-to-merchant payments. The ease with which users shall be able to pay through UPI will further help add more users to the digital economy (currently out of the 200M smartphones, only ~50M are transacting users).
Instamojo is working closely with UPI to increase its acceptance. We have a growing base of 150,000 businesses, and by giving them the UPI option, it is leading the charge for UPI adoption. We are also working with banks introduce promotional schemes that will drive awareness and adoption of UPI.
With UPI being introduced as a mode of payment collection to Instamojo’s users, the stage is set to witness a revolution very similar to the telecommunication revolution. This is an important step towards making India a cashless economy.