Cab hailing application Ola will now allow users to pay for rides through the Unified Payments Interface (UPI). Customers will now have an option called “Pay by UPI” along with cash, cards, and the Ola Money wallet. Once customers enter their virtual payment address (VPA), a collect request appears on the screen. Customers can then enter their PIN to complete their transaction.
Note that Ola hasn’t mentioned which bank it has tied up with for UPI payments. It also hasn’t mentioned whether the company will be acting as a merchant for UPI payments. MediaNama has written to the company and will update once we hear from them.
It’s important to remember that banks are allowed to charge merchants a higher fee than compared to P2P payments. Earlier, the NPCI said banks would be allowed to charge a similar interchange fee as the debit cards. But recently, the NPCI has changed the fee structure for merchants, as indicated by this Economic Times report. “Under UPI, the merchant discount rate (MDR) — the fee borne by the seller to provide services—is 0.25% for payments below Rs 1,000 and 0.65% for all other charges,” said AP Hota, MD & CEO, NPCI.
The number of UPI transactions grew by 2.47 million in January 2017 and the total amount transacted increased by Rs 990 crore. In the December 2016, volume and amount of transactions had increased by 1.71 million and Rs 607 crore respectively.
Ola added that it will now have a payment mechanism which will allow users to pay for their rides later. The product is called Ola Credit will let customers seven days of credit. Following which they will have to repay by net banking, credit and debit card or Ola Money.
This is similar to PayU’s LazyPay where the payments company will become an underwriter of transactions and charge consumers, on a fortnightly basis.