The world has witnessed the steady progress of digitization starting back in the 1990s. Technologies like MICR, ATM, credit and debit cards were followed later by digital wallets, prepaid cards and recharge vouchers. The progression of these new technologies and innovations supported the growth of the payments industry. With the rise of fintechs, we have seen even more innovative solutions and methods to transact digitally through initiatives like UPI—a first of its kind platform.
UPI, which stands for Unified Payments Interface, is a creation of the National Payment Corporation of India (NPCI), a Reserve Bank of India initiative. UPI allows for the transfer of money from one bank account to another instantly via an app on one's mobile device, 24 hours a day, seven days a week. Banks must be “UPI-enabled” for their customers to access the service through their own individual UPI IDs. It also allows UPI-member financial institutions to be a part of the NPCI and be integrated into the national payments network.
In India, some of the commonly used apps offering payment services via the UPI method are BHIM, which is developed by NPCI, as well as such privately developed apps such as Paytm, PhonePe, Google Pay and Amazon Pay.
Contactless payments have gained enormous popularity during the pandemic. As merchants and consumers avoid crowding into shops and neighborhood stores, more merchants have started taking and managing orders digitally, while requesting payments online as well. The UPI-use case will only grow further in the “phygital” world—the physical and digital space that will emerge in a post-Covid environment.
At Finacus Solutions, we operate as one of the largest integrators for NPCI as an ASP (Authorized service provider), helping cooperative banks get integrated into the network. Credit cooperative societies in India have yet to gain access to the UPI, but providing that access remains a goal of ours.
Simple steps of accessing a UPI-style platform
The UPI in India requires a simple set up process that can be replicated for credit unions elsewhere.
Once a member downloads the platform’s chosen app, they are required to choose their credit union or financial cooperative from the given options. To verify that it is their account, the credit union will send them a one-time password (OTP). Once the OTP is verified, the virtual payment address (VPA) is created.
The member then creates a login and password to register the account and make it active, allowing the member to send money or request that it be transferred to their account. Only the member’s credit union account is linked to the platform, not their entire mobile wallet. But they can link more than one credit union account to the platform.
Money can be transferred one of three ways:
- By entering the virtual payment address (VPA) of the receiver,
- By entering their account number and IFSC code, or routing number, or
- By scanning a QR code.
Helping people through the pandemic
Finacus has also developed a Subsidy Distribution Platform, which has proven crucial to helping people get through the COVID-19 pandemic.
In India, a DBT (Direct Benefit Transfer) or G2P (Government to Person) transfer platform is a form of financial assistance paid to an individual to achieve certain policy objectives. It is also a form of financial aid or support extended to an economic sector generally for individuals below poverty line, with the aim of promoting economic and social policy. Although commonly extended by the government, the entitlement can be used by the beneficiary at government registered merchant shops which distribute commodities. Beneficiaries can utilize this monthly entitlement all at one time or as they need.
The Subsidy Distribution Platform enhances the mechanism of transferring these subsidies. Beneficiaries can simply use their smart phones to access the subsidy to pay for goods, while merchants can use the same platform to process the subsidy payments. The Subsidy Distribution Platform is a mobile-based system that includes the complete life cycle of a subsidy transfer process, beginning with merchant onboarding, disbursement, monitoring and MIS reporting. With governments across the globe emphasizing the need for social distancing during the pandemic, Finacus Solutions has a digital solution that is ready to go.
Based in India, Finacus Solutions is an associate member of World Council of Credit Unions. They craft innovative, integrated software solutions and services to cater banking and financial institutions across the globe, taking care of their domain specific challenges and fast-paced industry trends.