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UPI
TRANSACTIONS AND GROWING ACCOUNTABILITY IN FINANCIAL SYSTEM WITH PAYMENT
DIGITIZATION
Unified
Payments Interface (UPI) is a mobile app-based payment system that brings
multiple bank accounts to one platform. It results in an effortless funds
transfer experience which is quite unique in the industry. UPI combines various banking services, smooth
fund routing, plus merchant payments into a single mobile application (of any
participating bank). It also handles “Peer Peer” collection requests, which can
be scheduled and paid according to need and convenience.
UPI was
introduced in the Indian financial system in the year 2016 and it encourages digitization in payment. The pilot launch was on 11th April 2016 by
Dr. Raghuram G Rajan, then Governor, RBI at Mumbai. Banks have started to
upload their UPI-enabled Apps on the Google Play store from 25th August 2016
onward. It has a daily transaction limit of up to Rs.1 lakh. As of March 2022, there are 314 banks available
on UPI with a reported monthly transaction of INR 9,60,581.66 crores.
The
pandemic has considerable influence on the UPI transaction growth according to market intelligence and business research. Even with lesser economic activities
during the pandemic, the UPI payments mostly doubled during that period. It is
continuing in the current fiscal year also.
There are
numerous benefits of the Unified Payments Interface (UPI). It is a fast, hassle-free, and the cheapest
way of money transfer, which you can do from anywhere and at any time. With the UPI app, there is no need to carry
cash. There is no transaction fee. Use
the QR code scan to make online and offline purchases. It works on immediate
payment services and is available 24*7. One can initiate transactions from any
bank’s UPI app and transfer funds with a virtual payment address. Both payment
and collection transactions are possible.
Of late,
most small traders and service providers switched over to UPI-based payment
systems as part of their business transactions.
They consider such transactions as good as cash transactions where
remittance or compensation out of their product or services are found
immediately in their account. Further,
they can use the same fund to procure goods or services for their business
activities.
Thus, the
arrival of UPI has a greater impact on the economic activities among the
unorganized sector and informal sectors which were under the clutches of cash
transactions previously. The UPI
transaction gives both government and tax authorities to track transactions for
all monitoring purposes including taxation.
This will bring more people under the tax net as well.
It gives a
clear lesson that adequate use of technology with public convenience could
achieve the much-needed accountability in financial transactions. Instead of creating multiple rules and
regulations and stifling economic activities, it is good for the progressive
government to tame technology to achieve its objectives.
DART
Consulting provides business consulting through its network of Independent
Consultants. Our services include preparing
business plans, market research, and providing business advisory services. More details at https://www.dartconsulting.co.in/dart-consultants.html
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