NPCI launches UPI 2.0 with overdraft facility

After a delay of several months, an upgraded version of the Unified Payments Interface (UPI), UPI 2.0, was launched on Thursday at a private event in Mumbai. Select members from the National Payments Corp. of India (NPCI), banks and the Reserve Bank of India (RBI) were present at the event. RBI governor Urjit Patel, State Bank of India (SBI) chairman Rajnish Kumar and Nandan Nilekani, the non-executive chairman of Infosys Ltd, and the innovation advisor at NPCI, formally launched the product.

NPCI is the umbrella organization for all retail payments in the country. It also manages the UPI mobile platform, which facilitates instant fund transfers between two bank accounts, without revealing the details of the accounts.

Several features were added to UPI 2.0, including an overdraft facility, which enables customers to link their overdraft account to UPI and carry out transactions instantly. The one-time mandate feature allows customers to pre-authorize a transaction and pay at a later date, while the invoice in the box feature allows customers to check the invoice sent by merchants prior to making a payment. The signed intent and QR feature enable customers to check the authenticity of merchants while scanning QR codes.

The Unified Payments Interface (UPI) is a system developed by the NPCI and the RBI to aid instant transfer of money using a cashless system. Using UPI services, one just requires a smartphone and a banking app to send and receive money instantly or to pay a merchant for a retail purchase. In the long run, UPI is likely to replace the current NEFT, RTGS, and IMPS systems as they exist today.

Payment service providers (PSPs) to provide the interface to the payer and the payee. Unlike the wallets, the payer and the payee can use two different PSPs.

Banks to provide the underlying accounts. In some cases, the bank and the PSP may be the same.

NPCI to act as the central switch by ensuring VPA resolution, affecting credit and debit transactions through IMPS.

UPI, built on IMPS, allows a payment directly and immediately from a bank account. There is no need to pre-load money in wallets. It allows payments to different merchants without the hassle of typing one’s card details or net-banking password.

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