Airtel Payments Bank has become the first payments bank to get on the Unified Payments Interface (UPI). Shashi Arora, MD and CEO of the bank said that this would allow their 20 million customers to create their personalized UPI handles on the Airtel app, and enable them to make digital payments in both the offline & the online space.
Note that Airtel Payments Bank will now get its own handle @airtel. The default virtual payment address (VPA) will the customer’s mobile number but customers can customize to their needs. Meanwhile, customers can also link their Airtel Payments Bank savings accounts to any of their UPI handles on other apps such as BHIM or UPI apps of other banks.
Meanwhile, its rival Paytm Payments Bank Paytm has still to integrate the UPI. 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).
The UPI saw a 12% growth in the total transaction volumes taking place between June and July 2017. The Number of transactions grew by 1.28 million in July 2017 whereas the total amount transacted increased by, up by Rs 313 crores. In June 2017, volume had increased by 1.19 million and amount transacted had grown Rs 333.05 crores.
Customers can also use MyAirtel app (Bank section) to scan any UPI QR code for making merchant payments. This will be crucial for Airtel Payments Bank to get into offline payments. Remember that the bank is opting for a purely digital bank play and does not even issue a physical debit card. Instead, it has a virtual debit card powered by MasterCard which can only be used at online stores. With the new integration, Airtel Payments Bank will get access to the UPI’s VPA network for merchants as well.
Note that banks are allowed to charge merchants a higher fee than compared to P2P payments on the 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. As such, this will provide Airtel Payments Bank a much-needed source of revenue. Remember that the bank is also charging customers on cash withdrawals and payments bank are not allowed to give out any loans or issue credit cards.
The bank also hasn’t announced any tie-ups with insurance companies and other lending companies such like its other rival Fino Paytech. Fino is going to leverage it business correspondents and look to cross-sell insurance and loan products from other companies to supplement its revenue stream.
Airtel Payments Bank reported deposits of Rs 68.33 crore at the end of the financial year ended 31st March 2017, which was its first year of operation, according to its annual report. It’s top 20 depositors accounted for around Rs 20.45 lakh (around 0.3% of total deposits), which is probably a function the Reserve Bank of India limiting deposits in Payments Banks to Rs 1 lakh.