The banks in India are rooting for recurring payments feature in UPI 2.0-enabled devices, Economic Times reported citing industry sources.
National Payment Corporation of India (NPCI) launched UPI 2.O in August 2018. UPI facilitates instant fund transfer between two bank accounts on a mobile platform. The RBI didn’t incorporate the recurring payment feature fearing misuse.
“This feature would have enabled customers to issue a onetime mandate to make recurring payments for periodic services rendered from merchants. The use cases for this would have been automatic payments of monthly bills and subscription-based services,” a senior official at a major private sector bank told ET.
Indian Banks’ Association had sent a detailed proposal to the regulators seeking permission for using this feature for automatic debits of loans and premiums from customers wishing to avail the service, ET reported.
“We had asked the RBI to make the feature available just for bank customers as it would have simplified the process of credit recovery on services such as EMI, credit cards and insurance premiums…the RBI scrapped the feature because it felt the technology could be misused by unregulated operators to widen their credit network using pyramid schemes and chit funds,” the source said.
ICICI Bank has upgraded its mobile application with select features of the technology including PayLater.
“It is an instant digital credit facility to enable customers to buy small ticket items immediately in a completely digital and paperless manner...the facility enables customers to shop online, pay bills and pay any merchant UPI ID at physical stores instantly,” B Madhivanan, chief technology and digital officer at ICICI Bank, told ET.
UPI was launched on 11 April 2016 and in the last two years the platform has emerged as a popular choice among users for sending and receiving money.
“In the existing UPI landscape, about 90% of the value is coming through P2P (peer-to-peer) payments. Once these functionalities of UPI 2.0 come, we will see P2M (peer-to-merchant) payments rise. We are in the final stage of testing and will look to launch this product in the next few days. The features are good additions to the existing UPI interface for both customers and merchants,” a spokesperson from Axis Bank told ET.