NPCI has few months back come out with the proposed Unified Payment Interface System (UPI). For those interested in details, the same can be found on the UPI page on NPCI website.
In layman terms, what it means is that NPCI will act as a clearing-house/ exchange for all forms of payments. The payer and payee can be working with any scheduled commercial bank, payment bank, small bank, prepaid issuer etc (Payment Service Providers, or PSPs). Payments can be made (payer initiated, or pushed) or requested (payee initiated, or pulled) using this interface.
NPCI is already the clearing-house for RuPay payments. As standards are put in place, any merchant just needs to be "acquired" once by any PSP, and thus get connected to the UPI switch. They can thereafter accept and request payments using instruments issued by any PSP.
What this means is that the cost of acqusition will go down drastically. Regulatory mechanisms will also cause the cost of transactions and MDR to come down materially. With a central switch and better risk management measures, the time taken for cash to be received by the seller will reduce from current T+2 to T+1 or T. As more businesses get acquired, and hence connected to the payment infrastructure in India, the need for cash will go down, as the basic problems of "at par" and "real time" get addressed substantially.
Also see the note on why cash is used in the About page.
In layman terms, what it means is that NPCI will act as a clearing-house/ exchange for all forms of payments. The payer and payee can be working with any scheduled commercial bank, payment bank, small bank, prepaid issuer etc (Payment Service Providers, or PSPs). Payments can be made (payer initiated, or pushed) or requested (payee initiated, or pulled) using this interface.
NPCI is already the clearing-house for RuPay payments. As standards are put in place, any merchant just needs to be "acquired" once by any PSP, and thus get connected to the UPI switch. They can thereafter accept and request payments using instruments issued by any PSP.
What this means is that the cost of acqusition will go down drastically. Regulatory mechanisms will also cause the cost of transactions and MDR to come down materially. With a central switch and better risk management measures, the time taken for cash to be received by the seller will reduce from current T+2 to T+1 or T. As more businesses get acquired, and hence connected to the payment infrastructure in India, the need for cash will go down, as the basic problems of "at par" and "real time" get addressed substantially.
Also see the note on why cash is used in the About page.
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