The Unified Payments Interface will have verified merchant virtual payment addresses (VPA) and will have a tick mark next to them, similar to verified accounts on Twitter. “This solves a lot of issues for banks. It will help them identify who is a merchant and whitelist them,” Nikhil Kumar, head of developer ecosystem of IndiaStack and iSpirt fellow, said at the 50p payments conference.
MediaNama has written to the National Payments Corporation of India (NPCI) for a confirmation and will update once we hear from them. Note that the UPI is a part of the IndiaStack along with the GSTN, Aadhaar Auth, eKYC, eSign, and DigiLocker. (Nikhil Pahwa adds: UPI is owned and operated by the NPCI, which is owned 100% by banks. Four banks – State Bank of India, Bank of Baroda, Axis Bank, and IDFC Bank are among those who fund Ispirt)
Kumar added that verification of merchants would also help users identify fraudulent transactions. One of the key features of the UPI is that merchants and users can initiate a collect request for payments. This could mean that fraudsters could initiate a collect request with a VPA similar to a merchant.
Remember that on the UPI, banks are allowed to charge a merchants a higher fee than compared to person-to-person payments. Banks have been tying up with more payment gateway aggregators to get access to more merchants. Typically, there is a revenue sharing agreement with banks when a merchant does a UPI transaction (20 basis points as it was in the case with Razorpay).
The second version of the UPI is due for release on March 2017 and verified merchant VPAs are expected to be a part of it. UPI 2.0 will have pre-authorized transactions through digital signatures and biometric authentication, Aadhaar integration and integration with the Bharat Bill Payments System (BBPS).
Banks are also struggling with refunds and failed transactions on the UPI. Some payment gateway aggregators who have also raised the issue that there is no refund API at the moment. Currently, companies have to send a batch of refund requests to a bank for processing. A source in a payment gateway added that the refund API would also be added in the second version of the UPI as well.
