Prelims 2021 Prelims cum Mains Science & Tech

WhatsApp gets NPCI nod to go live on UPI

In News

  • The National Payments Corporation of India (NPCI) has given its approval to WhatsApp to ‘go live’ (operate) on the Unified Payments Interface (UPI) in the multi-bank model.
  • According to NPCI, WhatsApp can expand its UPI user base in a graded manner (step by step), starting with a maximum registered user base of 20 million in UPI.

Background

  • WhatsApp has been running the pilot service of its payment service (WhatsApp Pay) in India, for the last two years.
  • However, till now WhatsApp had not received permission to run it on a full scale due to concerns over data localisation.
  • WhatsApp has nearly 400 million users in India, but the pilot service of WhatsApp Pay was limited to 1 million customers.

About: UPI

  • Unified Payments Interface (UPI) is an instant real-time payment system developed by National Payments Corporation of India, facilitating inter-bank transactions.
  • The interface is regulated by the Reserve Bank of India and works by instantly transferring funds between two bank accounts on a mobile platform.
  • As many as 189 banks are functional on the UPI platform.

Working of UPI:

  • In UPI, a user just needs to download the UPI app, register details, and create a virtual payment address (VPA). The user needs to link the VPA to their bank account.
  • This VPA becomes the users’ financial address and the user need not remember the details like beneficiary account number, IFSC codes, or net banking user id and password for sending or receiving money.
  • The UPI interface allows multiple bank accounts to be added into a single mobile application.

UPI in India:

  • Currently, third party applications such as PhonePe, Google Pay, Paytm, and Amazon Pay, dominate the UPI ecosystem in India.
  • According to industry estimates, the biggest player is Google Pay with over a 40 per cent market share, closely followed by PhonePe.

News Summary:

  • NPCI has given its approval to WhatsApp to start its operations on the Unified Payments Interface (UPI) in the multi-bank model.
  • According to NPCI, WhatsApp can expand its UPI user base in a graded manner (step by step), starting with a maximum registered user base of 20 million in UPI.

Details of WhatsApp Pay:

  • After the approval, people across India will now be able to utilise the messaging platform of WhatsApp to send and receive money.
  • The payment service will be available in ten Indian regional language versions of WhatsApp.
  • There is no fee for the transactions, and the WhatsApp Pay service is supported by 160 banks.

30% cap on transactions:

  • NPCI has also put a limit on the share of total number of transaction that a third party application can process in UPI.
  • Thus, any third party app, which uses the NPCI platform for sending and receiving payments, will not be able to execute more than 30 per cent of the total payments being done on UPI.
  • The 30 per cent will be calculated based on the total volume of transactions processed in the past three months.
  • The limit will not be applicable immediately on the existing players and these companies have been given time till January 2023 to comply with the limit norms. For WhatsApp and other future apps on UPI, the limit will apply from January, 2021.
  • The move is aimed to help address the risks to the UPI platform and protect the ecosystem, as it is expected to grow significantly in the near future.
  • It will also help to prevent a monopoly in the market, by ensuring that one single operator does not end up with most of the market share.

About: National Payments Corporation of India (NPCI)

  • National Payments Corporation of India (NPCI) is an umbrella organisation for operating retail payments and settlement systems in India.
  • It is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India.
  • It has been incorporated as a Not for Profit Company with an intention to provide infrastructure to the entire banking system in India for physical as well as electronic payment and settlement systems.
  • The Company is focused on bringing innovations in the retail payment systems through the use of technology for achieving greater efficiency in operations and widening the reach of payment

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