With a view to deepening financial inclusion and promoting the use of the Unified Payments Interface (UPI), Reserve Bank of India Governor Shaktikanta Das, on Wednesday, announced three new measures, including the launch a UPI-based payment product for feature phone users.
“It is proposed to launch UPI-based payment products for feature phone users, leveraging on innovative products from the RBI’s Regulatory Sandbox on Retail Payments,” said Das in the Monetary Policy Statement, noting that UPI is the single-largest retail payment system in the country in terms of volume of transactions.
“In the first cohort of RBI Regulatory Sandbox, some innovators had successfully demonstrated their solutions for feature phone payments under the theme of ‘retail payments’. These products, coupled with other complimentary solutions, will facilitate UPI-based digital payment solutions on feature phones to promote wider digitisation,” said the Statement on Developmental and Regulatory Activities.
Users of feature phones
India has a large mobile phone consumer base of about 118 crore mobile users, of which, about 74 crore have smart phones, indicating that there is a significant number of feature phone users in the country, it further said, noting that feature phone users have limited access to innovative payment products. At present, a smartphone and internet connectivity are needed to make UPI payments.
Das also announced a proposal to make the process flow for small-value transactions simpler through a mechanism of ‘on-device’ wallet in UPI applications.
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It is also proposed to enhance the transaction limit for payments through UPI for the Retail Direct Scheme for investment in G-Secs and Initial Public Offering (IPO) applications from ₹2 lakh to ₹5 lakh.
UPI is the single-largest retail payment system in the country in terms of volume of transactions, with 14 crore transactions per day in October this year.
Low-value deals
The RBI noted that one of the initial objectives of the UPI was to replace cash for low-value transactions. “Transaction data analysis shows that 50 per cent transactions through UPI were below ₹200, indicating its success,” it said.
Payment companies welcomed the announcements and said it will further expand the use of UPI.
“The acceptance of UPI payments through feature phones is a welcome move by the RBI. It widens the horizon of financial inclusion in India and enables a digital footprint for the masses, a prerequisite for evaluating the creditworthiness of an individual. It is a game-changer of sorts for a common man in India who can now be eligible for other financial services,” said Bipin Preet Singh, Managing Director, Co-Founder and CEO of MobiKwik.
“Enabling small-value transactions through an ‘on-device’ wallet in UPI app will not disturb the banking system every time a transaction is conducted, which will help conserve banks’ system resources. Facilitating UPI-based digital payment solutions on feature phones will promote wider digitisation offering a quantum leap in driving small-value transactions, especially in the Tier 2 and 3 markets,” said Mandar Agashe, Founder, Vice-Chairman and MD of Sarvatra Technologies.