2020-21, UPI transactions reached a record 22 billion (2,200 crore), and it is expected to reach 169 billion (16,900 crore) by 2025-26, growing at a CAGR (compounded annual growth rate) of 122 per cent, it said.
e. Epayment systems in the retail business segment have made a significant contribution in promoting financial inclusion in a larger space.
To capture new opportunities thrown by the digitised economy, businesses are conducting their commercial transactions utilising digital payment systems. However, there are problems that impede the adoption of digital payments that need to be addressed urgently [3]. India’s expanding usage of digital payment in retail business transactions, retail digital payments witnessed a shift in the country’s kindred with cash. This is seen by the rapid expansion of retail digital payments after initiating digital payment methods such as e-wallets, card payments, IMPS, UPI, etc. Cash still reigns supreme, but it is increasingly being viewed as a means of storing wealth as an economic asset rather than a means of making payments
The future of payments would be characterised by “speed, convenience, and competitiveness”. In the eyes of the common man, cash is always seen as the king, whereas now digital is regarded as a god with the inception of the UPI payment system. “Immediate Payment Systems (IMPS) and Unified Payments Interface (UPI) are two quick payment systems that have boosted retail digital payments in India”
India’s e-payment ecosystem has grown rapidly since demonetisation. As per the RBI report, “during 2014 – 19 digital payments have shown compound annual growth rate (CAGR) of 61% in volume and 19% in value.
Under the provisions of ‘The Payments and Settlements System Act, 2007’ The Reserve Bank of India (RBI) and the Indian Banks Association (IBA) established the umbrella corporation – ‘National Payments Corporation of India (NPCI)’ to operate retail payments and settlements systems in India’s payment ecosystem. To facilitate digital payments NPCI has developed an innovative payment instrument called ‘Unified Payment Interface (UPI)’. It is a digital payment framework designed to perform various banking functions and retail business payments using any mobile application of member banks. “Peer to Peer (P2P)” collection requests, which can be arranged and charged according to need and convenience
Initially, UPI was operationalized as a pilot launch with 21 member banks. It was inaugurated on April 11, 2016, in Mumbai by then-RBI Governor Dr. Raghuram G Rajan [6]. Since August 25, 2016, participating banks have been uploading their UPI-enabled apps on the Google Play store.
There are 227 Banks on UPI as of June 2021, with a monthly volume of 2,807.51 million transactions valuing Rs. 5,47,373.17 crore [7]. The UPI platform was upgraded to UPI 2.0 in 2018, increasing the single transaction limit from one lakh to two lakh rupees
Unified Payment Interface (UPI) is a tech-enabled payment arrangement allowing money to be transferred from one bank account to another in only a few clicks in no time. One can use any UPI client app, and a single app can be connected to multiple Bank accounts. Various payment methods like; Virtual Payment Address, Mobile Number, Account Number & IFSC, AADHAR, and QR Code can be used to send or request money. The key drivers of UPI are SIASC – Simplicity, Innovation, Adoption, Security, and Cost
UPI Payments
There`s absolute confidence that the Unified Payments Interface, or UPI, is the maximum extensively used virtual charge mechanism withinside the country. The release of UPI123Pay through RBI to allow function telephones for virtual transitions is some other large step forward.
AEPS or Aadhaar Enabled Payment System
AEPS is a financial institution-led charge version that permits Aadhaar variety holders to make economic transactions the usage of Aadhaar-primarily based totally biometric authentication from their Aadhaar connected financial institution accounts. AePS processed 225 million transactions really well worth Rs 28,522 crore in March 2022 alone.
IMPS or Immediate Payment Services
IMPS is a cell phone-primarily based totally interbank digital fund switch service. IMPS may be accessed via diverse methods, inclusive of cell banking, SMS, internet banking, or even ATMs.