The Reserve Bank of India (RBI) has given some breather to PPIs (prepaid payment instruments)  in the country by extending the deadline for completing the KYC (Know-Your-Customer) process for the users. The RBI has now extended the deadline to another six months from the earlier deadline of February 28, 2019. 

However, consumers who do not want to update their KYCs have other options to make payments digitally or through their mobile phones.  BusinessLine  has collated a few options that they could consider for making mobile payments:

UPI

Unified Payment Interface (UPI) is emerging as the biggest competition to wallet payments. Promoted by the National Payments Corporation of India (NPCI), UPI does not need an additional KYC as it is linked to bank accounts. Several businesses are also promoting UPI payments on their apps. Banks, through their apps, are sending notifications to their customers about the usage of UPI. Companies such as Ola and Uber have already integrated UPI into their apps.

Pros: Payments made via UPI are free and convenient.

Cons: Limited to ₹1 lakh per day. Requires internet and smartphone.

Google Pay

Unlike wallets, Google Pay does not require KYC since it uses UPI as the interface. Consumers can make any kind of payments and win cash-backs that go directly to the user’s bank account, unlike wallets where it gets stored in the wallet’s app. It is safe and secure, as it will require your UPI pin before making any payments. It also has NFC-enabled payments.

Pros: No transaction charges; offers and cash-backs included; easy to use.

Cons: Security concerns; needs internet.

WhatsApp payments

Users can now make payments through the popular messaging platform, WhatsApp. It works by merely linking the app to the user’s UPI which allows them to link their bank account without sharing confidential details. To make WhatsApp payments, both receiver and sender should have WhatsApp and UPI. Given the fact that several businesses across the country are using the Facebook-promoted messaging platform for communication, they are likely to add WhatsApp as a mode of payment soon. Currently, the payments are more of P2P (person to person) in nature.

Pros: No transaction charges; bank-to-bank transaction.

Cons: Security concerns related to financial data theft; internet required; UPI is a must.

MI Pay

Mi Pay by mobile manufacturer Xiaomi is the latest to offer payments via UPI. It works similar to Google Pay and lets users make utility payments such as phone bill, water bill, and electricity bill. Mi Pay will also allow users recharge their phone numbers, and make DTH recharge, among other things. However, unlike Google Pay, it also allows you to add your credit and debit cards for making payments.

Pros and cons same as Google Pay. Not widely accepted at present.

BHIM app

Promoted by NPCI, BHIM app allows customers to make all kinds of payments and financial transactions. It works on UPI. The government is currently offering cash-backs and discounts for making UPI payments through the app.

Pros : No transaction fee.

Cons: Poor UI; lo w adaptation; internet required.

USSD

Though Unstructured Supplementary Service Data (USSD) mode is not very popular among smartphone users, feature phone users and users with patchy internet data can use it for transferring money by dialling *99#.

Not suitable for making online payments. Moreover, there is a transaction fee of 50 paise charged to the customer and a transaction limit of ₹5,000 per day and ₹50,000 per annum.

This is suitable for customers at the bottom of the pyramid, and cannot be an alternative to mobile wallets. Customers need to activate the service by physically filling up a form at the bank.

Pros: Works without internet on smart and feature phones; works in regional languages; secure.

Cons: Not accepted by many merchants; transaction fee involved; has transaction limit, too.

AEPS

Aadhaar-enabled payment system (AEPS) is a bank-led model that allows online interoperable financial transaction at PoS (Point of Sale / micro ATM) through the Business Correspondent (BC)/Bank Mitra of any bank using the Aadhaar authentication. Needs KYC verification. Can be used to make merchant payments, money transfer, etc. A physical device (micro ATM) is needed for making payments. There are no charges for customers, but merchants get charged by the banks and that may vary depending on the type of transaction.

Pros: No charges for customers.

Cons: Does not work in the absence of micro ATM; not useful for making online payments.

Banking apps

Consumers can also use their respective banking apps to make utility bill payments and other payments. They can either do it through UPI or through IMPS or NEFT. While making payments through UPI involves no transaction costs, IMPS is chargeable above ₹1,000. NEFT charges vary from bank to bank.

Pros: Safe and secure. Can be used for any kind of transaction.

Cons: Transaction fees for IMPS/NEFT/RTGS. Might involve delay in processing time.

Credit/debit cards

Lately, transactions via cards are also growing. Both credit and debit cards have annual fees charged by banks and convenience fees by merchants at the point of sale, both online and offline. There are no cash-backs or incentives to use debit cards, but credit card companies offer points that could be redeemed for making purchases at certain merchants approved by the banks.

Pros: Easy to use; can be used online and offline; smartphone not necessary; works on desktop, too.

Cons: Charges involved; has expiry date.

Considering all the above mentioned modes, payments through UPI currently turns out to be beneficial for customers since they are free, have incentives attached, and are the best alternative to wallets at present.

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