The National Payments Corporation of India (NPCI), Axis Bank and Innoviti Payment Solutions have launched a solution where customers can pay via the Unified Payments Interface (UPI) on a point-of-sale (POS) terminal. Reliance Retail will be the first organized retail chain to implement the solution and is currently live in more than 200 Reliance Retail stores in Mumbai.

It looks like the NPCI is targeting large format retail stores. Unlike a small single cashier store where confirmation could be received via a text message on a mobile phone, large retail stores have a high cashier churn and they cannot monitor payment confirmations. It added that the new solution enables payment confirmation on a cashier-independent infrastructure. “With multiple checkout points, the cashiers in these stores have no direct means of payment receipt prior to releasing the purchased goods to the customer,” NPCI added.

Note that the NPCI said it was more interested in bank partnerships with merchants rather than P2P transfers. “We’ve made the UPI live on the P2P side, however, it holds great potential on the P2M sid … P2P transactions are not that frequent from a consumer standpoint. It happens once or twice in a month,” Dilip Asbe, Chief operating officer of the NPCI told in an earlier press conference. 

How does UPI at POS works? 

– When a customer requests UPI Payment mode, the cashier needs to select the option on the existing card POS terminal and inputs the relevant bill payment amount.
– A dynamic QR-code on the POS terminal screen is generated which can be scanned by any UPI apps.
– When scanned, the QR code automatically transfers relevant transaction details and displays it on the customer’s payment app for authorizing payment transfer.
– Once the payment transfer from customer’s bank account to store’s account is completed, the payment solution triggers a settlement confirmation to the initiating in-store POS terminal for printing out a transaction completion charge slip.

Charges for merchants

It’s important to remember that banks are allowed to charge merchants a higher fee than compared to P2P payments. The NPCI said it would charge a similar interchange fee to the MDR (merchant discount rate) on debit cards. However, it looks like 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.