Chaitanya GudipatyMoneycontrol
Nearly three months since demonetisation, Prime Minister Narendra Modi’s pet project — cashless India — seems to be gaining traction from all quarters. Digital money transactions made on Unified Payments Interface (UPI) between January 1 and January 19 surged nearly 1,000 percent to Rs 980 crore from about Rs 90 crore in November 2016.Similarly, the volume of UPI-based money transfers during the period increased to 27 lakh from a meagre 3 lakh in November 2016, according to Reserve Bank of India’s Electronic Payment Systems representative data.
The surge can be attributed to the government’s renewed push for UPI platform through BHIM app which was launched late December. BHIM stands for Bharat Interface for Money.
The skyrocketing volume and value of UPI transactions now threatens to pip prepaid instruments such as mobile wallets. According to RBI data, prepaid payment instruments clocked Rs 1,300 crore in value against 5.45 crore transactions during the period.
In its commentary, Moneycontrol had said that BHIM app has the potential to render mobile wallets redundant (Read here).
Meanwhile, some mobile wallet operators have turned to UPI in to mitigate potential loss of customers to the government’s digital transaction platform. The move met with resistance from banks which said wallet operators weren’t necessarily in abeyance with norms.
Last week, ICICI Bank and NPCI had locked themselves in a war of words over blockage of Flipkart-owned payments app PhonePe.
Even National Payments Corporation of India — the umbrella organisation for all digital banking transactions — noted that “PhonePe and Flipkart Apps are in contravention of the UPI guidelines of interoperability”.
NPCI had then directed PhonePe and Flipkart to comply with the UPI guidelines and allow payments from UPI handles of all banks on their apps.
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