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Mobile Payment Mechanism in India


India is the second-largest communication market which means mobile is very common even in the remote villages or areas. But traditional banking industry cannot fulfil the needs of the India’s large population through the services like RTGS (Real Time Gross Settlement), ECS (Electronic Clearing Services) for Credit or Debit, NEFT (National Electronic Fund Transfer) System, IMPS (Immediate Payment Services).

Hence, India has move to the mobile payment mechanism to access the basic financial services from trusted source at fingertip such as UPI i.e. Unified Payment Interface which can transfer money instantly through mobile. This mechanism is a flagship programme of the Government of India with a vision to transform India into a digitally empowered society and knowledge economy. “Faceless, Paperless, Cashless” is one of professed role of Digital India.

Mobile Payment Mechanism

Mobile Payment Mechanism is a mode of payment using mobile phone instead of using methods like cash, cheque and credit card.

In this mechanism, a customer or user can transfer their money or pay for goods and services by sending a SMS.

Types of Mobile Payment Option

  1. UPI (Unified Payment Interface)
  2. AEPS (Aadhar Enabled Payment Services)
  3. USSD– It is a mobile banking based digital payment mode.
  4. E-wallet or mobile wallet– It is the digital version of your physical wallet with more functionality.

UPI

A Unified Payment Interface (UPI) is a smartphone application that allows users to transfer money between bank accounts. It is a single-window mobile payment system developed by the National Payments Corporation of India (NPCI). It eliminates the need to enter bank details or other sensitive information each time a customer initiates a transaction.

NPCI made own mobile app and named it BHIM (Bharat Interface for Money). BHIM App allows users to transfer through mobile number, UPI ID, and account number plus IFSC code. It also lets users edit their UPI ID. On BHIM app, users can send up to Rs 20,000 per transaction and a maximum of Rs 40,000 per day from one bank account.

Features of UPI

It is essentially a single platform that merges different banking services and features under one umbrella. It’s salient features are given below:

  • Immediate payment
  • Virtual payment
  • Money ways to pay
  • Split Bill
  • Simple and Easy way of payment or transaction
  • One App many accounts
  • Payment to QR Code
  • Virtual Payment Address
  • Free for all

Requirements to avail the UPI services

  • Bank Account
  • Linked Mobile Number
  • Debit Card
  • Active SIM
  • Mobile balance to send SMS
  • Smartphone
  • Android or IOS
  • Internet or Data pack

Terms and Condition for the services of UPI

  • UPI transaction limit- not more than 2 lakh
  • BHIM App limit- can’t pay more than Rs. 20000 in a single transaction.
  • It works only with bank accounts.

Popular Apps

  • Paytm
  • Tez
  • Phone Pe
  • SBI Pay
  • Free Charge
  • Chillr
  • iMobile

Committee related to the Mobile Payment Mechanism (Digital Payments)

Committee on the Digital payment was formed under the leadership of Finance Secretary Ratan Watan to recommend the steps for accelerating the growth of digital payments and changes in the regulatory mechanism under various acts such as Payments and Settlement Act, the RBI Act and the Information Technology among others.

Recommendation of the committee

  1. The RBI will be the regulatory body for SIPs (Systematically important Payments System).
  2. Creation of separate board (Payment Regulatory Board) for retail payment under RBI.
  3. This committee had suggested that there should be inter-operability of the payments system between banks and non-banks.

Bank Associated with UPI Services

There are of the popular and major banks that are associated with UPI services such as:

  1. State Bank of India (SBI Pay)
  2. ICICI Bank (iMobile)
  3. HDFC (HDFC Bank Mobile Banking)
  4. Axis Bank (Axis Pay)
  5. Bank of Maharashtra
  6. Federal Bank (Lotza)
  7. Karnataka Bank (KBL Smartz)
  8. Punjab National Bank (PNB UPI)
  9. South Indian Bank (SIB M-Pay)
  10. United Bank of India (United UPI)
  11. UCO Bank (UCO-UPI)
  12. Union Bank of India (Union Bank UPI)
  13. Vijaya Bank (Vijaya UPI app)
  14. Yes Bank (Yes Pay Wallet)
  15. Bank of Baroda (Baroda MPay)
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