As
on date,
55 Banks are Live on the NPCI UPI platform. Multiple approaches are in pipeline
to enable the remaining Banks to onboard UPI platform.
A large number of Banks live on NPCI UPI Platform will make
it attractive for 3rd Party PSPs to roll out innovative UPI
products.
UPI transactions can be executed through the App, Website
and QR as the payment address needs to be keyed in manually or scanned to
successfully complete the Transaction.
There have been a number of instances wherein the wrong VPA
was keyed in, and the payment landed in a wrong bank account!! It was a hectic job, to recall the funds
credited to the wrong beneficiary.
The QR mode is
superior over manual keying mode of the VPA, however in some cases, the QR Code
not be scanned, and the VPA had to be keyed in manually.
To overcome the
barriers associated with 01) Manual keying of VPA 02) Scanning VPA, NPCI has
decided to go for additional payment channels under ‘Proximity Based Payments’.
The new
‘Proximity Based Payments’ channels in UPI will be live in the next 2 quarters.
As a first
step, NPCI has floated a “REQUEST FOR PROPOSAL (RFP) FOR ENGAGING SERVICE
PROVIDER FOR PROVIDING PROXIMITY PAYMENTS FOR NPCI”
The RFP focus
is on UPI only. The Objective of this RFP: To make available method of payments
other than text and QR to the end customers, which will expedite the payment
process as well reduce complaints.
Remote and
Proximity payments in UPI are currently done only by entering the VPA or scanning
a QR within the App or a web site, which limits the possible methods in which payment
can be made.
Banks have been
implementing various proximity payment solutions in their existing non-UPI apps
but have not been able to extend it to their UPI apps as there are no standardization
sets and the current implementation limits them to work with their own PSP apps
only.
NPCI has been
getting requests from various proximity payment players on taking their products
and having them embedded within NPCI library or environment and/or certified by
NPCI to be implemented within BHIM App or other UPI Apps.
Hence, the
above RFP is expected to fill the gap and A) reduce complaints associated with
wrong payments B) increase transactions routed through UPI c) provide a
platform for FinTech companies to be part of India’s digital transactions
platform.
The main requirements
for Proximity Payments are the presence two devices to complete the financial
transaction.Proximity
Payments are equal to ‘Card Present’, transactions.
In India, the
NFC based payments did not take off to various reasons.
The best examples
of Proximity Payments are Apple Pay, Samsung Pay, Android Pay
Through this
RFP, NPCI intends to introduce the benefits of proximity payments to UPI transactions.
UPI has gained
acceptance since its launch and more and more bank customers have understood
the benefits of UPI.
Introducing
Proximity Payments will add an additional security layer and reduce the
last-mile friction.
The RFP states
that the following:-
Solution:
The Bidders
need to develop a solution for proximity payments where the mechanism for transfer
could be anyone of the below however not limited to the following.
1. Sound
2. Tone
3. NFC
4. RFID
5. UHF
6. Location
based payments
The
Bidder/solution provider would need to have a fair understanding on UPI and
also would need to provide solutions which addresses the below concerns as
well.
a) Multiple VPAs
configured.
b) Storage of VPA
c) Functioning of
proximity payments in case the app is not launched & battery optimization.
d) Payments
between un-intended devices.
Proximity
payments via UPI will encourage merchants to adopt UPI quickly.
One of the
major drawbacks in the present UPI process is that intentionally a wrong VPA
may be provided by the store staff to the customer. This leads to payment to a
person other than the merchant.
Through
Proximity Payments, this can be avoided.
The ‘Collect’,
option is not preferred for onsite payments, as the time taken to complete the
transaction is more.
The same
applies to ‘QR Code’ option too. In case, the store staff shows a wrong ‘QR
Code’, to the customers, the payment will land in the wrong bank account.
Service Charges
–
No charges for
P2P transactions
Solution
Provider may charge for P2M transactions
It is not for a
single service provider to provide all the methods of proximity payments. NPCI
may choose different vendors for each proximity payment channel.
5 Benefits of
Proximity Payments being part of NPCI UPI
Benefit No 01) –
Introduce the Joys of proximity payments to Digital India.
Benefit No 02) – Enhance the confidence levels of merchants to adopt UPI
Benefit No 03) – Reduce complaints associated with wrong payments, time-outs, etc
Benefit No 04) – Increase the number of UPI transactions
Benefit No 05) – Increase the turnover rates for P2M transactions
Benefit No 06) –
Enable Banks to launch ‘Cash Management Products’ based on UPI
Benefit No 07) –
Ensure quick adoption of proximity payments channels to other financial products
Google TeZ is a
trailblazer in UPI based proximity payments.
Good to read
articles:
MoboMoney takes
sound-based mobile payments to India
A new approach
to digital
payments - Ultracash
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