Paytm will integrate its payments bank unit into United Payments Interface (UPI), making it the first mobile wallet to have a direct access to the UPI interface for P2P payments. The company did not mention a timeline for the launch, although an Economic Times report said that the UPI integration will go live by August. Once live, consumers can make money transfers to each other, and make payments to registered merchants using UPI virtual IDs (E.g. username@paytmbank).
Remember that UPI, which is owned and operated by the National Payments Corporation of India (NPCI), and built by a vendor called RS Software, only allows partner banks on it. Currently, there are 34 banks providing UPI payments. But it seems like NPCI is now opening up to wallets. MediaNama readers might recall the reason behind the delay in adding wallets to UPI: AP Hota, MD & CEO told MediaNama in May last year, “Bank applications do not have such a great user experience. So the banks asked give us time to catch up and leave the wallets out of it. It is just a competitive position.”
The UPI works on top of the Instant Payment Service (IMPS) architecture, a real-time interbank electronic fund transfer system developed by the NPCI. P2P payments on UPI are currently free, while for person-to-merchant transactions, banks could charge merchants an interchange fee.
Advantages of Paytm Payments Bank’s UPI integration
Access to UPI’s VPA network: Paytm had launched payments bank operations in May providing free P2P money transfers (between Paytm users), as well as “unlimited free” money transfer to other payments banks. With UPI option, users can now send and receive money without the hassle of entering bank details like A/C no, IFSC code, etc. provided that the receiver also holds a virtual private address (VPA). VPA’s are unique addresses assigned to UPI users.
An interoperable QR code system for banks and wallets alike: The biggest advantage of UPI—user-friendly, instant fund transfer with uniquely identifiable VPAs—is one way to simplify payments. Paytm, on the other hand, has QR code-based payments which allow users to uniquely identify other users and transfer cash easily. The NPCI also has Bharat QR, an inter-operable QR code network for payments which currently includes Visa, MasterCard, RuPay and American Express. NPCI had earlier mulled merging BharatQR with UPI for wider reach. With UPI now opening to wallets, we could expect BharatQR to be integrated with QR codes generated by wallets as well.
Note that Paytm already has an offline presence via QR codes payments and at last count, it said that it had over 5 million merchants. It recently integrated QR code payments on Paytm Mall, its Online-to-offline (O2O) segment: customers who walk into the retail shops to scan the Paytm Mall QR code will be able to follow the store online, place orders and get offers within the app.
Updates: RS Software informs us that they built UPI, not iSpirt. The post has been updated to indicate this