With P2P transactions in place, UPI players shift focus to merchant space

With P2P transactions in place, UPI players shift focus to merchant space

Mumbai, May 15: While United Payments Interface (UPI) players have established their foothold in peer-to-peer transactions, they are now focusing on boosting merchant transactions.
The National Payments Council of India (NPCI) is reported to be working on two developments in UPI – UPI 2.0 and Proximity payments. While the previous developments were focused on strengthening the general infrastructure of the network, the new developments seem to be targeted at increasing peer to merchant (P2B) transactions.
Both UPI 2.0 and proximity payments geared towards merchant payments as it would allow a person to make payments without manually typing the merchant’s number or code. UPI 2.0 will have additional features like Aadhaar-based payments, periodic payments of predetermined amount, scheduled payments, among others. These are features that other digital payments players like wallets already offer.
NPCI is also said to be running a pilot on proximity payments through UPI. This can invalidate the need of PoS machines for card-based payments. The cost of point-of-sale (PoS) terminals is one of the biggest deterrents to digital payments.
The government’s decision to waive merchant discount rates (MDR) up to Rs 2,000 played a huge role in boosting digital transactions, especially UPI acceptance at PoS terminals. Since the waiver only applies to debit card and UPI transactions, it may deter merchants from accepting wallet payments. Payment processor PayU saw a growth in UPI transactions from 25.48 per cent in September 2017 to 77.87 per cent in March 2018, with a corresponding fall in share of wallet transactions.
Various UPI players have already started tapping the scope of merchant transactions with the government’s app Bharat Interface for Money (BHIM) offering incentives to merchants accepting UPI Payments. On the other hand, market leader Google Tez in December, had announced its plans to target small merchants through partnerships with various Indian banks.
“We want to help offline merchants go digital. With two-thirds of our users beyond the major cities, we think there’s real potential to digitise the smaller merchants across India who so far have been slightly slower in going digital,” Diana Layfield, Vice President, Head of Finance & Commerce Products, Next Billion Users, Google told reporters earlier.