Fintech unicorn Razorpay on May 30 launched Turbo UPI in partnership with Axis Bank and the National Payments Council of India (NPCI). Turbo UPI aims to make UPI payments faster and reduce potential payment failures.
Merchants can integrate Turbo UPI at the payment gateway, which eliminates the need for customers to go to third-party UPI payment apps. This will allow customers to pay directly from their UPI-linked bank accounts within the merchant app. The additional step of switching apps is estimated to cause almost 5-10 percent of payment failures.
Last week, Paytm, which also has a payment gateway solution, launched a similar product called "UPI SDK". Paytm's product supports UPI payments through UPI Lite, as well as Rupay Credit Cards linked to the UPI account. SDK stands for software development kit, or a software plug-in that a merchant can integrate with their payment gateway.
“This is a one-click process and the payment is completed much faster. Here no PSPs (payment service providers) are required, the merchant app will itself become a UPI App. The merchant will install a Razorpay Plug-in and the customer can directly link their bank accounts to the merchant app,” said Shashank Kumar, cofounder and Managing Director of Razorpay, in an interaction with Moneycontrol.
The additional steps involved in using a third-party app like Google Pay or PhonePe can make the payment process cumbersome. Sometimes, messages or notifications for the payment prompt may be delayed, which could result in customers missing the payments. This is one of the reasons why some large digital merchants prefer to build their own UPI payment solutions. For example, Amazon has Amazon Pay UPI, while Zomato recently launched Zomato UPI. Flipkart also has plans to start its own UPI payments solution.
Razorpay claims that Turbo UPI can help businesses achieve a significant increase in the success rate of UPI payments by up to 10 percent. The product also offers insights to merchants on the end-user drop-off pattern, while also enabling merchants to control the end-to-end payment experience of their customers.
While Turbo UPI is still in the pilot stage, Razorpay said that customers of popular apps including Tata StarQuik, Ixigo, FNP (Ferns N Petals), Trainman, and Dhan are among several companies that will soon enable this product on their platforms. Razorpay expects more than a thousand of its merchants to enable this facility over the next couple of years.
“Based on the intelligence and data gathered by our banking partner, Axis Bank, we will pre-select the bank accounts, if the customer has multiple accounts," Kumar added. Around 56% of Razorpay's digital payments are done through UPI, indicating the importance of this feature for its merchant partners.
How it works
When a customer makes a payment for a purchase, for example, on Swiggy or Zomato (Merchant app), the payment process, if UPI is chosen, involves transitioning from the Merchant App to a payment app (such as Google Pay or PhonePe, etc.). The customer selects the linked bank account and enters the secure UPI PIN.
The page then redirects back to the merchant app, and a notification is sent to the customer to inform them that the payment has been completed. While this is the standard process currently, there are chances of payment failures due to network issues, drop-off problems, and more.
However, with faster UPI payment solutions, the process can be simplified to a single click, reducing the failure rates. In this case, the customer's bank account is linked to the merchant's app. The customer only needs to enter the UPI PIN while staying within the merchant's app, and the payment is completed.
“The whole thing comes down to a 30-second process. We had been working with NPCI on how to improve this and now we have Turbo UPI…This improves the success rate of payments by at least 10 percent,” said Kumar. He added that this solution helps merchants to collect data on where the payment stops and helps in servicing a customer better next time. “There is better analytics and better visibility of the lifecycle of the customer," he said.
Razorpay also expects that this move will increase the opportunities and cross-selling choices.
UPI in India
UPI has become the common and preferred mode of payment for end users.
"Daily transactions on the UPI platform may touch 1 billion in the next three years as it reaches its full potential," said Dilip Asbe, Managing Director and Chief Executive Officer of NPCI during a panel discussion at Moneycontrol's inaugural India Fintech Conclave (IFC) in March.
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