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P2P payments being evaluated for UPI One World: sources

Economic TimesEconomic Times · 10m ago
P2P payments being evaluated for UPI One World: sources
Medial

The UPI One World service in India, currently used by foreign travellers for merchant transactions, may soon be expanded to include interpersonal transactions. Once approved, users will be able to make payments to small merchants, public transporters, and tourist guides using this service. Currently, only five players are enabled on UPI One World, but the potential for growth is hindered by the requirement for physical KYC and the restriction to only merchant transactions. Suggestions have been made to allow P2P transactions with a limit of Rs 5,000 initially. The volume of UPI One World transactions remains relatively small compared to overall UPI payments. Efforts are being made to facilitate digital verification of visas and travel permits. Enabling international travellers to experience UPI during their stay in India is seen as a way to showcase the technology.

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Exclusive: Major shift in UPI as Govt may allow MDR for large merchants

EntrackrEntrackr · 4m ago
Exclusive: Major shift in UPI as Govt may allow MDR for large merchants
Medial

Exclusive: Major shift in UPI as Govt may allow MDR for large merchants As of now, the government provides 15 basis points (bps) of subsidy for UPI transactions below Rs 2,000. One basis point is one-hundredth of a percentage point. Banks may soon find a monetization opportunity in Unified Payments Interface (UPI) transactions, with the Finance Ministry (FM) and the Reserve Bank of India (RBI) likely to permit Merchant Discount Rate (MDR) collection only from large merchants. According to three sources familiar with the matter, the move is under active consideration and targets businesses handling high volumes of UPI payments. "Large merchants such as Amazon, Dream11, Swiggy, Zomato, and Zepto may soon start paying MDR to banks," said one of the sources requesting anonymity. "The Finance Ministry and the RBI are likely to define a threshold such as daily UPI transaction volume/value for MDR applicability on high-UPI transacting merchants," the source added. MDR on UPI refers to the fee that banks charge merchants for processing UPI-based payment transactions. “The new MDR slab comes with a condition that large merchants will not be allowed to pass on MDR to consumers, they must bear it as a cost of doing business,” said the person quoted above. According to sources, the discussion on applying MDR on UPI transactions has been ongoing since the last quarter of FY25. The potential move comes in response to growing concerns from banks and payment aggregators around the sustainability of UPI infrastructure, which currently operates without any revenue model and inadequate subsidy. “Banks are already bearing losses on UPI. Ongoing costs like server upgrades, tech investments, and compliance add up. Without MDR from large merchants, sustaining UPI’s growth will be difficult,” said one of the senior banking executives of a leading private bank requesting anonymity. Last year, the Payments Council of India (PCI) proposed that large merchants, already paying 2% MDR on cards, should also pay 25 bps for UPI, as subsidies aren’t needed given UPI’s popularity and lower cost. In March, PCI wrote to PM Modi highlighting that the government’s Rs 1,500 crore subsidy covers only a small part of the Rs 10,000 crore needed annually to sustain UPI. Ongoing investment in innovation, cybersecurity, compliance, and infra justifies the 25 bps MDR for large merchants. Banks used to charge 30 bps on UPI transactions before it was waived off completely by the FM in 2020. Sources say the government will likely allow banks to charge MDR on large merchants soon, but no exact timeline has been set. Queries sent to RBI and the Finance Ministry received no response. As per sources, the policy is still at a deliberation stage, and no final decision has been made by the Finance Ministry or RBI. Policy decisions may change or evolve before formal notification. Despite soaring UPI volumes, the current revenue model is unsustainable, causing strain on banks, Payment Aggregators, and Payment System Providers (PSPs). Introducing MDR could provide crucial support to banks and enable a revenue-sharing model that benefits PAs, PGs, and PSPs.

RBI introduces Offline CBDC; users can pay without internet

EntrackrEntrackr · 16d ago
RBI introduces Offline CBDC; users can pay without internet
Medial

In a groundbreaking leap for India’s digital payments ecosystem, the Reserve Bank of India (RBI) has unveiled the Offline Digital Rupee enabling users to transact without internet or even telecom connectivity. The new feature allows payments to be made with just a tap or with QR, effectively making digital money work as seamlessly as physical cash. Launched today at the Global Fintech Fest (GFF) 2025 in Mumbai, this marks a major milestone in the RBI’s Central Bank Digital Currency (CBDC) journey, positioning India as one of the first countries in the world to operationalize an offline version of a CBDC. Cash, but digital: India’s programmable CBDC goes truly offline. The offline feature was launched in collaboration with HDFC Bank, a key partner in the RBI’s pilot program. Visuals showcased at the event illustrated real-world use cases such as paying for tea in the Himalayas or making rural market purchases without connectivity. The rollout forms part of RBI’s Programmable Central Bank Digital Currency (PCBDC) initiative which not only allows offline transactions but also introduces programmability, enabling restrictions or specific use conditions on digital rupees for targeted schemes, subsidies, and corporate disbursements. Unlike UPI, which requires an active internet connection and routing through bank servers, Offline Digital Rupee transactions occur directly between two digital wallets using near-field communication (NFC) or other secure proximity technologies. The payment process is instant: users simply tap their phone or device to the receiver’s, and the value transfers from one wallet to another even in low or no network zones. Each transaction is executed in digital rupee denominations, with change automatically generated in the wallet, mirroring the behavior of physical cash. The RBI and participating banks say the offline CBDC will be cheaper and faster than UPI, as it eliminates intermediary switches, payment gateways, and network dependencies. While UPI revolutionized online payments, the offline digital rupee is poised to extend that revolution into the next frontier: payments without connectivity. The feature supports both Person-to-Person (P2P) transfers and Person-to-Merchant (P2M) payments, making it interoperable with existing UPI QR infrastructure. “This is not just a technological advancement, it's a foundational shift in how money can move in a connected and unconnected India,” said a senior banker on condition of anonymity. As India continues to set global benchmarks in digital finance, the Offline Digital Rupee could well inspire central banks worldwide to rethink the next generation of sovereign digital currencies.

PhonePe dominates UPI ecosystem with 49% market share in April

EntrackrEntrackr · 1y ago
PhonePe dominates UPI ecosystem with 49% market share in April
Medial

Digital payments platform PhonePe has continued to be the number one player in the unified payments interface (UPI) ecosystem with a market share of close to 49% in April 2024 across P2M (person to merchant) and P2P (person to person) transactions. PhonePe has maintained the leadership position in the overall UPI transactions for more than 40 months (since November 2020). As per the data issued by the National Payments Corporation of India (NPCI), PhonePe clocked 6.5 billion transactions via UPI out of the total transactions of 13.3 billion in the last month. This roughly translates to 48.87% market share in the UPI ecosystem which also includes players like Google Pay and Paytm, among many others. UPI transactions declined in volume in April by 1% to 13.3 billion from 13.44 billion in March. The total transaction value in the same period also fell 0.7% to Rs 19.64 trillion from Rs 19.78 trillion in March. While PhonePe and Google Pay registered 6.5 billion and 5 billion transactions respectively in March as well as in April, Paytm’s transactions slipped to 1.11 billion from 1.21 billion during the last two months. As of April, Google Pay and Paytm controlled 37.5% and 8.3% market share in the overall (P2M and P2P transactions) UPI ecosystem. Value wise, PhonePe had close to 51% market share followed by Google Pay and Paytm with 35% and 5% share respectively. For Paytm, this is the third consecutive decline in terms of monthly transactions in 2024. The trend can be seen below: In January, RBI had imposed restrictions on Paytm due to compliance concerns. This appears to be the primary reason behind the fall in UPI transactions for the Vijay Shekhar Sharma-led fintech major. The firm also saw a sharp fall in active users after January this year. Entrackr exclusively reported the development in April. Paytm later received permission from NPCI to participate in UPI through the third-party application provider (TPAP) under the multibank model. In April, CRED became the fourth largest UPI-enabled app which processed 138 million transactions. This was followed by Amazon Pay and Fampay with 64.33 and 46.64 million transactions, respectively. Government- promoted BHIM recorded 25 million transactions while WhatsApp reported over 34 million transactions in the last month. Significantly, NPCI is reportedly planning to review its decision to implement a 30% cap on the market share of UPI apps by the end of 2024.

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