While the current UPI is structured largely for peer-to-peer payments, the revised version will have many features that will promote merchant payments.
One key feature is that transaction limits in UPI 2.0 are set to double to Rs 2 lakh from the earlier version. Also, payments can soon be made out of an overdraft account as against only a cash account at present.
Under the new version, merchants can block a certain amount in a customer’s account as security and debit it at a future date without additional authentication. According to banks, the facility will be useful in transactions such as booking hotel rooms and airline tickets.
Although the RBI had proposed that e-wallets will be allowed to be part of this platform, UPI 2.0 at present allows only bank accounts to be used for payment transactions. The earlier proposal was to facilitate biometric payments using the Aadhaar database under UPI 2.0. However, that is not happening now.
Merchants are likely to welcome UPI 2.0 as it will allow them to add an invoice to a collect request. QR-based UPI payments will become more secure as the code will now include a certificate, which will assure the sender that the money is going into the right account.
Paytm senior VP Deepak Abbott said, “Almost 99% of the eight million merchants accepting Paytm have a full-KYC account and are registered as merchants with Paytm.” The increase in limits and the facility to link overdraft accounts will enable UPI for very large transactions, he added. “At present our transaction ticket size is slightly below our rivals as we have been strongly supporting Paytm for low-value payments,” said Abbott.
The second phase is coming at a time when UPI transaction are showing record growth, driven by private players like Paytm and Google Tez. In the month of June, UPI transactions hit nearly 25 crore, an increase of 30% over 19 crore in May 2018. The value of these transactions grew 22% in June 2018 from Rs 33,288 crore in March 2018.
Among the apps, Paytm accounted for 38% of total transactions followed by Google Tez at 22% and PhonePe at 19%. Bhim, the one-time market leader promoted by NPCI, has slipped to fourth place with only a 7% share.