Enthused by the quantum jump in the volume and value of transactions in the last one-and-half years, the National Payments Corporation of India (NPCI) is examining the feasibility of introducing the next version of Unified Payments Interface (UPI).

This version will allow transaction authorisation using Aadhaar-based biometric and mandate generation/recurring payment authorisation through one-time authentication.

Banks, under the aegis of NPCI (the umbrella organisation for operating retail payments and settlement systems in the country), are closely examining the next version of UPI (UPI 2.0) keeping in view the aspects of user convenience and security.

UPI is a mobile phone-based payments solution for effecting person-to-person transfers and merchant payments.

To address security concerns if users lose their mobile phone or others being able to access their UPI PIN, bankers say an alternative transaction authentication mechanism using biometric (fingerprint/iris) is being looked into.

Currently, UPI transactions are authorised using PIN (personal identification number).

However, with PIN being used across retail payments systems, issues relating to users having to remember multiple PINs, forgetting PIN, or entering wrong PIN leading to transactions being declined need to be addressed.

Transaction authentication using biometric could be made available to the UPI ecosystem and users with compatible smartphones will be able to use this as an alternative to authorise transactions, said a senior public sector bank official.

“Introduction of biometric will make the entire transaction life cycle frictionless and enhance user convenience. It will also make payments more secure. Errors related to wrong UPI entry will be eliminated, thereby improving the transaction success rate,” explained the official.

UPI mandate

Given that users have an inherent need to make payments that are either one time or recurring in nature (utility bills payment, insurance premium, etc), NPCI is looking at mandate creation as a one-time activity, allowing users’ account to be debited as per the agreed terms and conditions without the user having to authenticate the transaction every time.

UPI currently does not have the functionality of generating mandate or authorising recurring payments through one-time authentication. This functionality is sought to be introduced in UPI 2.0 to enable UPI users to perform recurring payment transactions with ease and convenience.

Mandates in UPI can be initiated by either a payer or a payee (individual, corporate, merchant, etc). Payer initiated mandate in UPI include a user creating a mandate for recurring payment of the house help’s monthly salary on, say, the first of every month; creating a mandate for crediting an electronic store owner’s account with equated monthly instalment for purchase of a washing machine, etc.

Payee initiated mandate in UPI include a life insurer creating a mandate (collection) request for its customer to pay premium on, say, monthly basis; a property owner creating a (collection) mandate request on the tenant for monthly rent.

UPI transactions soar

UPI transactions skyrocketed from 93,000 transactions aggregating ₹3.10 crore in August 2016, when it was launched, to 14.5463 crore transactions aggregating ₹13,144.3 crore in December 2017. The number of banks that are ‘live’ on UPI has gone up from 21 in August 2016 to 67 in December 2017.

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