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UPI, IMPS, MMID In Detail
Unified Payment Interface -Future of Payments in India
Introduction:
We are seeing the tide which is rapidly moving towards a cashless economy or say digital money. It is really a boost to the economy where mobile wallets are increasing and e- commerce transactions are becoming easier. The benefit from this digital systems can be used to reduce the cash flow. The transparency will be channelized and it will help to build the financial history of each and every one, which will result in the form of financial inclusion. By keeping all these aspects in mind the central bank of India (RBI) has taken a big step in terms of making India a cashless economy as it has launched Unified Payment Interface (UPI) initiated by National Payment Corporation of India (NPCI).
Background:
The Reserve Bank of India (RBI) had released a payment system vision during the period of 2012-2015. The main agenda for releasing the vision is to encourage the implementation of a cashless society in our country. The real mission was that the payment and settlement systems need to be secure, efficient and it needs to meet international standards. Against this backdrop, the NPCI was set up to integrate all the multiple systems into a uniform process for all retail payment systems. In the mid-week of April 2016 RBI Governor launched the UPI developed by NPCI. It is a nice initiative to introduce UPI to make it easier and to provide a single interface across all systems. As of now 21 banks are implementing this UPI app. It is a type of payment system which allows easy and quick transfer of money between two parties.
Unified Payment Interface:
This interface will integrate the entire payment systems in India. It uses a single application programme interface with a series of Application Programme interface (API’S). The mobile devices are the primary object for all the payments.
Working:
It is a payment system which allows the transfer of money between two bank accounts by using a smartphone. A customer will be paying directly from a bank account to different dealers both online as well as offline. There is no need of typing any card details, IFSC code or any passwords. It is a type of payment system which is like the existing NEFT, RTGS etc. UPI includes transactions such as bill payments, remittances, merchant payments etc. In this digital era, every one of us is having smartphones. Each and every user with android phones can download the UPI from Google Play store. After the installation process, you need to set up the app login and then create a virtual address, add the bank account and then finally set a mobile pin (M-Pin) and then start using UPI. The transaction limit is 1 lakh.
Virtual address:
It is the most innovative idea or we can say it is the heart of the UPI we generally make payments by using card details such as card number, CVV etc. Typing these numbers in a mobile is not a hassle free and to solve this problem, UPI has come up with an idea of the virtual address. It will be in the form of ‘bankexamstoday@idbi’. There is no need of furnishing any other details.
Features of UPI:
- Payment systems should be simpler. Transfer of money should be done with just an identifier without having any complex details to hand. It should be done at a simple click.
- Innovation is a major aspect. Both the payer and payee shouldn’t face any difficulties.
- The solution needs to have strong and efficient data protection.
- The adoption of this app needs to be scalable to a billion users and even large scale adoption also.
- In the coming 5 years, the number is expected to rise 500 million users of smartphones. So the solution should be channelized in a proper mechanism to take full advantage of that.
For Example, if a user wants to make payment to the commercial store, he can simply tell his virtual identity to the cashier the cashier will generate an invoice in UPI and the user approves it using his smartphone. In this process, the payment will be made.
Usage of UPI:
UPI works only on the mobile interface.
Some banks have integrated UPI with the existing apps and some have included a new one.
Users can send money using their virtual ID only. By using the virtual ID only we can do payments. An alert message will be sent so as to authorise the transactions.
Advantages:
- The UPI will have a significant control over current systems and can take mobile payments to next level.
- The UPI is supported by the aadhar system. It is based on the unique identification code and it is ensured that each transaction happens between two persons.
- UPI will create a new ecosystem so that it will offer simpler and instant solutions to the customers. There will be no entry barriers for start-ups and for small businesses as it will solve the problem of collecting money for products and services.
- It is a very significant move, as the service can be provided to the merchant with the help of the smartphone at the place of business.
- It is a big platform for a growing economy like India. There will be no paper money and consumers will not be facing any barriers.
Conclusion:
The innovation is becoming a key factor as new players are emerging and entering into the payment landscape, so as to improve the customer experience. NPCI is playing a key role in ensuring the participants to innovate more with the existing systems. The increase in smartphones, universal access to banking in phones provides us with a unique opportunity to maintain an edge over the e- payments and to provide customers with stringent security and unparalleled ease of use.
IMPS (Immediate Payment Service) in India
IMPS (Immediate Payment Service)
IMPS (Immediate Payment Service) is an instant, 24 * 7, real-time inter-bank electronic funds transfer system, provided by NPCI ( National Payments Corporation of India) through which one can transfer money instantly across India, through mobile, internet and ATMs. IMPS is not only safe but also economical both in financial and non-financial perspectives.
Unlike the transaction by either NEFT or RTGS, which can done only the working hours, the IMPS service is available 24*7 throughout the year including bank holidays.
In August 2010, NPCI conducted a pilot study on the mobile payment system with the banks like SBI, BOI, UBI and ICICI. As a result, on 22 November IMPS public launch happened by Smt. Shyamala Gopinath, DG RBI at Mumbai and this service is now available to the Indian public.
Objectives of IMPS:
- To make this user-friendly so that customers can access their bank account and make remittance anytime.
- To make payment simpler with the use of mobile number.
- To achieve the goal of RBI in digitization of retail payment.
- To make the mobile payment system safe and secure.
- To build the foundation for a full range of mobile banking services.
The participants of IMPS:
- Remitter (Sender)
- Banks
- Beneficiary (Receiver)
- National financial switch by NPCI
Some Important points:
- To participate in IMPS bank should have approval from RBI for Mobile Banking Service.
- Customers have to register their mobile number for transaction through mobile.
- The customer get a unique Mobile Money Identifier (MMID) and MPIN from the bank, which is 7-digit number.
- A basic phone or smartphone can used for IMPS.
- There is no mandatory to have a bank account for availing IMPS, unbanked customer can initiate IMPS transaction using the services of Pre-Paid Payments Instrument Issuer (PPI).
- Customer can linked more than one account to the same mobile number.
- The charges for remittance through IMPS are decided by the banks and PPIs.
*99# USSD – Towards a Cashless Economy
Introduction
Unstructured Supplementary Service Data (USSD) (*99#) is a mobile banking service that allows customers to access the financial and non-financial services of the banks.
Agencies Concerned
National Payments Corporation of India (NPCI) is the nodal agency of USSD
USSD establishes a network between Banks and Telecom Service Providers (TSP)
About USSD
USSD technology is a GSM standard for transmitting information providing session-based communication in the banking services
Customer has to register their mobile number with their bank
Customer access financial services by dialling *99# from their mobiles registered with their bank accounts
USSD works exclusively on all GSM handsets
USSD links the benefits of the telecommunication network to make financial and banking transactions easier.
USSD Features
No internet is required for its operations
Uses voice based connectivity
Very simple to use
Available to all GSM mobile users through a common code ‘*99#’ across all TSPs
No roaming charges charged in addition to the ordinary service
Works round the clock on all days including holidays
USSD will act as a key financial inclusion measure of GOI
Customer need not install any new apps to avail this service
USSD Services
USSD offers three main types of services to customers including
Financial
Non-Financial and
Value added services
Financial Services
Financial services include fund transfers in the means of
P2P – Person to Person
P2A – Person to Account
P2U – Person to UID
Non-Financial Services
Mini Statement
Balance Enquiry
Know MMID
Generate OTP
MPIN
What is MMID?
MMID is the 7 digit code given by the bank to the user while registering for mobile banking
Value-added Services
Aadhar based money transaction (*99*99#)
How to use USSD?
Customer has to dial *99# from their mobile
Welcome screen appears
Customer has to enter their bank IFSC first 4 letters or short name of Bank in 3 letters
Various options pop up for the user
The user has to select the appropriate option and complete their transaction
For fund transactions or transfers using MMID and mobile number, both the sender and the receiver must have registered their mobile numbers in their banks
However, the receiver need not have to register their mobile numbers in their banks for receiving money using Aadhar number or account number from the sender
Limitations
USSD is charged by TSPs from the customers
A maximum rate of Rs. 1.50 per transaction is set by TRAI
This charge will form a major hindrance for common man to switch to USSD
RBI has initially set a restriction of transacting only 5000 rupees per transaction
NPCI must make this USSD totally free of cost to achieve the cashless economy as promised by Prime Minister Mr Modi
Conclusion
USSD is a major initiative of NPCI to move towards a cashless economy like the USA
USSD enhances financial inclusion to a great extent
It helps India to move to digital revolution helping in ‘Digital India’ mission
Moving to a cashless economy will help curb black money, corruption etc
USSD is a positive step forward towards making India, a developed nation
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