With Unified Payments Interface, real competition will be between banks; customers will be up for grabs

It will be an open world for bank customers under the proposed Unified Payments Interface (UPI), the new payment mechanism being launched by the National Payments Corporation of India (NPCI).


It will be an open world for bank customers under the proposed Unified Payments Interface (UPI), the new payment mechanism being launched by the National Payments Corporation of India (NPCI).

While questions are being made on the possible impact of UPI on players offering mobile wallets, experts feels that the real competition will be between member banks to retain their customers once the new payment mechanism is launched.

“A customer of bank X can now download the UPI app of bank Y and transact. It really boils down to whose app is better. The customer will choose that app and eventually be open for acquisition by that bank. So the real competition will be between the 21 banks which have climbed the UPI platform,” Naveen Surya, Chairman, Payment Council of India & MD, ItzCash told FeMoney.

NPCI on Thursday said initially UPI app of 19 banks will be available on the GooglePlay Store in in a couple of days for customers to download and start using. “UPI is a unique payment solution which empowers a recipient to initiate the payment request from a smartphone. It facilitates “virtual payment address‟ as a payment identifier for sending and collecting money and works on single click 2 factor authentication,” NPCI said while announcing its launch plans.

Surya said that ushering in of UPI would eventually expand the marketplace for payments systems and open up new possibilities for existing players such as ItzCash, PayTM and Mobikwik. “UPI will throw up new opporutnities for existing players in mobile wallets and e-wallets. It will widen the market. We can bring in innovation and new ideas into the system,” he said.

Ramki Gaddipati, CTO and Co-Founder, Zeta, a fintech startup providing payment solutions, said that existing mobile wallet players will have to eventually reorient their business models to be part of the UPI platform. “UPI is devise-independent and form-independent. Players such as PayTM and Mobikwik are closed systems. They cannot survive like that for long. They may eventually benefit but have to change their business models,” Gaddipati said.

He said that the real impact of UPI will be felt in 2-3 years time, and not immediately. “Such a system, was much needed across the country. It will eventually help in dissociating from plastic cards and replacing them in two years or more We may not see the manifestations immediately,” Gaddipati said.

Gaddipati also felt UPI will drive down cost of payments transactions. “NPCI is aligned to the goals of the country. It will operate UPI to make the system widely accessible. Therefore, transaction costs will come down as compared to costs incurred while transacting through Visa or MasterCard,” he said.