In February 2020, UPI clocked 1.32 Billion transactions amounting to INR 2.23 Trillion/ USD 29.7 Billion – the highest since the launch of the National Payments Corporation of India (NPCI) led payment protocol since August 2016. In the last one year, the volume and value of transactions have more than doubled, making UPI one of the most popular means of digital payments in India. But how? UPI’s popularity can be attributed to the simple safe, and hassle-free system coupled with its reach through leading digital payments platforms and major public sector or private banks.

Here are five ways in which the Government of India is driving the popularity of UPI as a payment protocol.

1)Building Simplicity & Uniqueness in its Design
United Payments Interface (UPI) has all the advantages of digital payment protocols but eliminating the hassles of
them. A UPI payment interacts through a virtual UPI identity and does not require the time and effort for setting up beneficiary account details involved in e-bank transfers like National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS) or Immediate Payment Service (IMPS), and sends money in real-time. Additionally, it eliminates the need for storing payee’s money in a digital wallet as while making a payment, the money is debited directly from the payee bank account. Nonetheless, UPI ensures security by a two-step authentication while making payments.

2)Presence across all leading Digital Payments platforms
Today there are 33 UPI enabled third-party apps, including fintech market leaders like Google Pay, Paytm, Walmart owned Phone Pe etc. This strategy has helped UPI reach out to the digital payments users who were already using these platforms. Moreover, the NPCI had developed BHIM as an exclusive UPI app to introduce the payment protocol in 2016. Today, the consumers have a plethora of options on which they can pay via UPI and with wallet-based payments losing relevance UPI will be the preferred payment option in the coming days.

3)Partnerships with major Public Sector and Private Banks
Since introduction, the NPCI has increased the number of UPI member banks by 7 times. Member banks are those private or public sector banks which are enabled to accept and process UPI payments. Today there are 146 banks that offer their customers to register themselves on any UPI enabled app with the help of their debit cards and bank linked smartphone number. 48 of these banks also act as Payment Service Provider (PSP) which means they have their own UPI enabled apps through which account holders can process UPI payments. With stronger partnerships with banks, UPI is gaining popularity and in the coming days, NPCI envisages expansion of the user base. Last year NPCI CEO, Dilip Asbe remarked, “UPI has recently crossed 100 million users, making it one of the fastest adoptions of any payments system anywhere in the world. NPCI’s objective for the next three years is to expand the UPI user base to 500 million.”

4)Policies to encourage high volume and high-value transactions
NPCI has been taking bold steps in driving the popularity of UPI. In March 2020, the NPCI had declared to double the transaction limit at stores run by verified merchants for specific high-value use cases. This was done to adapt UPI payments to its increasing demand in high-value transactions like investments in capital markets, premium pay-outs, and bill collections. This means for specific pre-defined use cases the UPI transaction limit will be INR 2 Lakhs which earlier was limited to INR 1 Lakh. The NPCI has also directed all member banks to start enabling cash withdrawal services using any UPI platform from June 2020. This is with an objective to diversify the use cases of UPI and onboard new users in the platform.

5)Promotions to communicate safe, easy and right way to use UPI
The NPCI has launched a “UPI Chalega” campaign along with a dedicated website (https://www.upichalega.com/ ) to guide users on safe, right and easy use of UPI payments. The website informs and guides the users on different use case scenarios and helps users in installing, registering and making UPI payments. You can visit their website to watch interesting videos they have developed to promote UPI. Additionally, NITI Aayog has come up with interesting GIFs (please find them here: https://www.niti.gov.in/niti/digital-payments-digital-payments-made-easy) in English and Hindi promoting easy use of digital payments.