Everything you want to know about UPI. (Photo: The Quint)

UPI Comes To Point-Of-Sale Machines As NPCI Seeks To Increase Merchant Users

United Payments Interface (UPI) is now coming to merchants. Almost a year after its launch in April last year, the real-time payment mode will now be available to brick-and-mortar merchants through point-of-sale (PoS) machines. On Thursday, the National Payments Council of India (NPCI) launched the offering, dubbed UPI@POS, in partnership with Reliance Retail.

Customers can now make a payment through the UPI interface by scanning a dynamic QR code that appears on the PoS machine screen. The PoS machines must be configured to enable this capability. NPCI has tied up with Bangalore-based payments company Innoviti which has about 60,000 merchant terminals on its network already, and will also synchronise machines issued by other companies, but for a fee.

The ability to display a dynamic QR that captures both the virtual payment address as well as the amount of transaction is a first-of-its-kind solution, reducing the number of steps a customer must go through to make a payment, AP Hota, chief executive officer of NPCI, told BloombergQuint.

“This initiative will increase UPI payment acceptance points in retail stores, It is expected to play a vital role in driving a more cashless future,” he said in a written press statement.

UPI had a slow start in its initial days but the number and value of transactions picked up after the government launched its BHIM (Bharat Interface for Money) app that allows a customer to make a payment through any bank’s account without downloading multiple apps. The app has crossed more than two crore downloads and has close to 60 lakh active users, according to data provided by NPCI.

Of these, merchant transactions are only about 17 percent, Hota said. The launch of the PoS-based UPI solution comes as NPCI is looking to boost the number of merchant users.

The rollout will begin with 200 Reliance stores in Mumbai and expand to other cities. NPCI is already in talks with other big merchants as well as payment companies, Hota said.

While UPI transactions are free at the moment for peer-to-peer transfers, merchants will have to pay a merchant discount rate similar to that on debit cards for accepting payments through UPI-enabled PoS machines.

Axis Bank is partnering with these companies to power payments. The bank’s head of retail banking Rajiv Anand told BloombergQuint that this new offering will bring new customers, who would have earlier withdrawn cash to pay at retail stores, into the bank’s fold.

Customers can use any UPI app to make these purchases – the NPCI promoted BHIM or individual bank apps. However, the privacy of customer information remains a concern. Merchants accepting payments through this mode will get access to customers’ virtual payment address (VPA) – which is often their phone number – since the BHIM app offers that as a default username.

This would give merchants access to phone numbers of customers without checks on what they do with this information. Hota does not see this as a cause for worry, saying the same information is shared in any other payment mode.

“You would give your number to do a Paytm transfer, you will give your bank account number to do RTGS or NEFT so I don’t see a reason to worry,” he said.

Next in the line of offerings, in keeping with the government’s push for more digital payments, is Aadhaar Pay. This requires a user’s biometrics to authenticate a transaction and execute it directly through his/her bank accounts.

The government is targetting 10 lakh merchants on Aadhaar Pay in this calendar year while 9.72 lakh traditional PoS machines have been added in the four months post demonetisation, Hota said. The NPCI is also trying to get 10 lakh additional terminals specifically for transactions through BharatQR, yet another payment mode that runs on the rails of card networks such as Mastercard and Visa.

“We are looking to have four million terminals to really scale up India’s digital payments penetration. The government’s target is to have 25 billion digital transaction a day,” Hota said.