Unified Payments Interface, the instant inter-bank fund transfer mechanism operated by the National Payments Corporation of India (NPCI), is set to get a major upgrade with new features and a doubling of the transaction limit to Rs2 lakh. However, the Reserve Bank of India (RBI) has not approved ‘standing instruction’ on UPI, which was slated to be one of its pioneering features, said two bankers aware of the matter.
“While the necessary approvals from the RBI (Reserve Bank of India) have arrived, the standing instruction feature has not been approved,” said a senior banker on condition of anonymity because the matter is under regulatory purview.
The standing instruction feature would have enabled consumers to instruct banks to debit their accounts regularly for repeat transactions, much like the auto-debit facility for loan repayments or mutual fund investments. NPCI was trying to introduce the feature to save users the hassle of manually authorising such payments repeatedly.
“I think the central bank could have felt that such a feature would be contrary to the two-factor authentication that the RBI has mandated for digital payments within India, hence no approval,” the other banker said.
The bankers said NPCI could rope in a senior central banker to introduce UPI 2.0 within the next few weeks. The facility was launched in 2016 by then RBI governor Raghuram Rajan.
“UPI 2.0 will be a major upgrade, especially the doubling of the payment limit to Rs2 lakh will bring in a host of new use cases,” one banker said. Consumers will get a range of new features on UPI, starting with an overdraft facility to getting invoices attached with payment requests. One prominent feature on the upgraded UPI application would be the ‘block payment’ option, which consumers can adopt for cab rides, ecommerce deliveries, buying stocks during IPOs and other transactions.
One banker said that with this feature, service providers can block a certain amount in the customer’s bank account and debit it on successful completion of the service. In case of a cab ride, it can be on a trip completion or in case of ecommerce, it could be after an order is delivered.
Industry executives said this feature could push many cash-on-delivery payments in the ecommerce space onto digital modes, where customer confidence is expected to go up.
With invoices being attached to payment requests, consumers will be able to check bills before transacting.
The use of UPI has grown over the past two years and the latest updates are expected to attract fresh consumers, expand use cases and increase repeat transactions on the platform.