13.04.2024
Unified Payment Interface (UPI)
For Prelims:two new facilities for Unified Payment Interface (UPI) users,Unified Payment Interface (UPI)
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Why in the news?
Recently the Reserve Bank of India (RBI) has unveiled two new features for Unified Payment Interface (UPI) users.
Important points:
- RBI Governor Shaktikanta Das announced these initiatives as part of the monetary policy statement, highlighting user convenience and their potential to drive adoption of digital payments.
- The initiative aims to streamline transactions and cash deposits.
Reserve Bank of India (RBI) has introduced two new facilities for Unified Payment Interface (UPI) users:
- UPI access to prepaid payment instruments (PPIs) through third party apps.
- Enabling UPI for cash deposit facility.
1.UPI Access to Prepaid Payment Instruments (PPIs) through Third Party Apps:
- This initiative by RBI aims to allow individuals to make UPI payments from prepaid payment instruments (PPIs) through third-party apps.
- Which expands customer convenience and promotes digital transactions for small value payments.
- This means users can now link their PPI wallet to third-party UPI apps to facilitate transactions seamlessly.
- Experts believe that this advancement will bring PPI at par with bank accounts for carrying out UPI transactions through third-party applications like PhonePe and Google Pay.
2.Enabling UPI for cash deposit facility:
- This initiative by RBI aims to enable cash deposits at Cash Deposit Machines (CDMs) using UPI, mirroring the existing UPI cardless cash withdrawal process.
- Currently, cash deposits in CDMs mainly depend on debit cards, but this new feature will eliminate the need for physical cards.
- The initiative simplifies cash deposit processes, converting them into card-less transactions.
- This will require users to only have UPI-enabled bank accounts to deposit cash in the CDM, thereby enhancing banking convenience and efficiency.
Unified Payment Interface (UPI):
- Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank).
- It merges multiple banking features, seamless fund routing and merchant payments under the hood.
- It also caters to “Peer to Peer” collection requests which can be scheduled and paid as per requirement and convenience.
- Keeping the above context in mind, NPCI launched a pilot with 21 member banks.
- The pilot launch was done by Dr Raghuram G Rajan, Governor of RBI, in Mumbai on 11 April 2016.
- Banks have started uploading their UPI enabled apps on Google Play store from August 25, 2016.
Source: PIB