These are all Unified Payment Interface (UPI) apps that have become an intrinsic part of our lives. They help us make instant, real-time mobile to mobile money transfer.
On the night of 8th November 2016, in a defining moment, Prime Minister Modi announced the landmark decision to demonetise all 500 and 1000 rupee notes. Overnight huge amount of the cash disappeared from the market. By the time it could make a comeback, UPI had moved in to fill the void. And the biggest gainer then was Paytm.
Three years later transactions via UPI have recorded a new high of 1 billion.
According to ACI Worldwide and AGS Transact Technologies (AGSTTL), digital transactions in India could be worth USD1 trillion annually by 2025, with four out of every five transactions being made digitally.
Digital Payments in India
From peer to peer transfers, camera-enabled QR codes, to voice banking, India has come a long way.
From close to 1.5 million digital payment acceptance locations in 2016-17, the number has risen to 10 million locations.
There are several factors that have contributed to the growth of digital payments – inefficiencies in the country’s banking system, a large unbanked and underserved population, steep smartphone penetration, increasing access to the internet, a booming e-commerce market, and availability of a large talent pool which understands both technology and financial services.
A significant reason for this growth is the strong support from the government to make India a cashless economy.
However on 5th March this year India’s growing dependence on UPIs came to light amid the YES Bank collapse. Many UPIs were affected while PhonePe and its users were the hardest hit, since PhonePe was totally dependent on Yes bank to facilitate its payments.
What is UPI?
Unified Payments Interface (UPI) is an instant real-time payment system developed by National Payments Corporation of India (NPCI) to facilitate inter-bank transactions. The interface is regulated by the Reserve Bank of India and works by instantly transferring funds between two bank accounts on a mobile device.
UPI allows the use of your smartphones as a virtual debit card and is considered as the advanced version of IMPS(Immediate Payment Service) .
It has made the money transfer process a lot easier. You do not have to remember the receiver’s account number, account type, IFSC, and bank name. Instead, you can do the money transfer only by knowing his Aadhaar number, mobile phone number registered with the bank account, or UPI ID.
After the launch of NPCI ‘s UPI Payment platform, almost all Indian Banks introduced their own UPI payments App integrating the NPCI’s BHIM-UPI platform. Not only the Indian Banks, but several other third-party companies have also created their own UPI payments app using UPI’s API and partnering with any Indian Bank. As of January 2020, 144 Banks have already joined in UPI payment platform.
Even social media sites, such as Whatsapp, have integrated the UPI platform for sending and receiving quick money on a real-time basis.
According to Nandan Nilekani, NPCI advisor, security is fool-proof with UPI as the transaction happens in a highly encrypted format.
Leading UPI apps
Pioneered and developed by NPCI, BHIM was conceived and launched by the government of India, to bring in financial inclusion to the nation, and make India a cashless economy. It is a payment app that lets you make simple, easy and quick transactions using UPI.
One can make direct bank payments to anyone on UPI using their UPI ID or by scanning their QR with the BHIM app. BHIM app currently supports 20 languages (including English). Currently, there is no charge for transactions from up to Rs 100,000. Some banks might, however, levy a nominal fee for UPI or IMPS transfers. The maximum number of transactions per day is 10.
If the 10-transactions-per-day limit has been reached, the user needs to wait for 24 hours from the last transaction before making another transaction. Currently, the fund transfer limit has been set to a maximum of Rs 20,000 per transaction and a maximum of Rs 40,000 in a 24-hour period.
Paytm is one of the most popular UPI apps and digital wallets in India. It was founded in August 2010 by Noida based Vijay Shekhar Sharma with an initial investment of USD 2 million. It started off as a prepaid mobile and DTH recharge platform, and later added data card, postpaid mobile and landline bill payments in 2013.
By January 2014, the company launched the Paytm Wallet, and the Indian Railways and Uber added it as a payment option.
It launched into e-commerce with online deals and bus ticketing. In 2015, it unveiled more use-cases like education fees, metro recharges, electricity, gas, and water bill payments. It also started powering the payment gateway for Indian Railways.
Paytm merchants can link their multiple existing bank accounts with Paytm BHIM UPI ID and accept money in whichever account they wish.
Paytm has raised $1 billion in November 2019, taking valuation to $16 billion. The latest funding led by US-based asset management firm T Rowe Price has cemented company’s position as India’s most-valued startup. In the previous round, Paytm had raised $300 million from Warren Buffett’s Berkshire Hathaway in 2018.
It plans to use this money in the money on merchant expansion in both online and offline modes as well as to make an aggressive push in the financial services business.
Google Pay is a digital wallet platform and online payment system developed by Google to power in-app and tap-to-pay purchases on mobile devices, enabling users to make payments with Android phones, tablets or watches. On September 18, 2017, Google launched an UPI-based app Tez in India.On August 28, 2018, Google rebranded Tez to Google Pay.
Google Pay is the simplest way to send money, recharge your mobile, or pay for groceries. One can send or receive money with zero fees, straight from their bank account to almost anyone. Besides, one can send or receive money even if their contact is not on Google Pay. The app supports 55 banks in India including ICICI Bank, State Bank of India and HDFC Bank.
The app also offers exciting rewards and scratch cards, which makes it a good option for those looking for amazing cashback offers.
Digital arm of Flipakrt, PhonePe is a popular UPI payment application that allows you to repeat a payment that you have made in the past from the history section. The process of fund transfer is seamless instant, and like other applications, it offers exciting cashback on particular transactions.
Founded in December 2015, by Sameer Nigam and Rahul Chari, Bangalore based PhonePe app went live in August 2016 and was the first payment app built on Unified Payments Interface. The PhonePe app is available in over 11 Indian languages, and is accepted as a payment option across 5 million offline and online merchant outlets.
The app crossed the 100 million user mark in June 2018 and also crossed 5 billion transactions in December 2019.
Since the setback because of Yes bank debacle, it has now leveraged ICICI bank as its partner to offer UPI services on its platform.
Last year April, Amazon Pay received capital infusion of Rs 2,771 crore according to regulatory filings sourced from Tofler, a business intelligence platform. Soon after, Amazon announced that it would allow Amazon Pay users to transfer money to each other through Unified Payments Interface (UPI).
UPI services on Amazon.in app are provided in association with Axis Bank Limited and is powered by BHIM.
Customers can use their Amazon Pay UPI ID to shop on Amazon.in, and also to make payments for their everyday needs including recharges and bill payments without entering bank account or debit card credentials, or going through a multi-layer process to pay from their bank account.
In 2016, Amazon Pay started with the vision to solve the problem of payment failures, and issue refunds to customers returning products. The following year, Amazon India obtained a wallet licence. Today, it has on boarded leading merchants like food delivery player Swiggy, ticketing portal BookMyShow, travel agency Cleartrip, and online pharmacy Netmeds, apart from covering utilities payments.
Gurgaon based MobiKwik UPI has a network of over 3 million direct merchants, 140+ billers and 107 million-plus users, and records over 1 million transactions every day. Founded in 2009 by Bipin Preet Singh & Upasana Taku, MobiKwik is backed by marquee investors including Sequoia Capital, American Express, Tree Line Asia, MediaTek, GMO Payment Gateway, Cisco Investments, Net1 and Bajaj Finance.
In fact, MobiKwik is well known for its product innovation and cutting-edge technology. Earlier this year, it rolled out the first-of-its-kind instant credit product called ‘Boost’ that ensures loan disbursal in a matter of 90 seconds. MobiKwik is the first in the industry to give loans in a mobile wallet.
It has partnered with ICICI to facilitate payments and supports 52 banks in India, including IDBI, Kotak Mahindra Bank, and Royal Bank of Scotland.
UPI payment applications are getting increasingly popular, and the majority of the people prefer this mode of payment due to the hassle-free transaction and minimal transfer fees.
There are a plethora of UPI payment applications present in the market and people tend to be confused regarding which application to choose as different applications provide different benefits. However, at the end of the day, each one serves the purpose of seamless transactions, and is contributing to India’s vision of a cashless economy.