NPCI plans to inculcate Aadhaar-based payments in UPI 2.0

The National Payments Corporation of India (NPCI) is planning to come out with the next version of its Unified Payments Interface (UPI) after witnessing a healthy jump in both volume and value of transactions over the last one-and-a-half years, according to a report by Hindu BusinessLine.

The upgraded version will reportedly allow Aadhaar-based payments and mandate recurring payment authorisation through an OTP (one-time password). An Aadhaar-based transaction can be performed by any user by simply providing his or her biometric details.

Both banks and the NPCI are looking at user convenience and security while developing the UPI 2.0, the report said.

UPI is a mobile phone-based payments solution aimed at simplifying person-to-person transfers and merchant payments. These payments are authorised by a PIN (personal identification number).

However, there are multiple issues with this method of authentication like users having to remember multiple PINs, forgetting their PIN, or entering the wrong PIN, which lead to transactions getting declined.

“Introduction of biometric will make the entire transaction lifecycle frictionless and enhance user convenience. It will also make payments more secure. Errors related to wrong UPI entry will be eliminated, thereby improving the transaction success rate,” an official told the paper.