UPI: The Dawn of Digital Fintech Nirvana - UPSC Current Affairs
Jul 18, 2022
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Context
Probable Question
About The Unified Payments Interface (UPI)
Significance
Context
The Unified Payments Interface or the UPI, has now processed, more than 40% of all retail digital payments (non-cash and non-paper payments) in India.
Probable Question
From the dawn of civilization, man has always accumulated and hoarded. However, the Unified Payment Interface (UPI) enables one to move around with an empty pocket. Comment.
Alsp Read: Digital Banking Units
About The Unified Payments Interface (UPI)
- UPI was launched in 2016.
- It is operated by the National Payments Corporation of India (NPCI), which was formed by the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA), in 2009.
- The main aim behind this initiative was to create a robust payment and settlement infrastructure.
- It operates on top of the Immediate Payment Service (IMPS) which was created by the NPCI for immediate fund transfers.
- Functioning of UPI:
- To use UPI, the bank account must be mapped to a Virtual Payment Address (VPA).
- The above step is essential for proper fund movement of a customer’s VPA to a target VPA, to complete the transaction.
- UPI does not involve a Merchant Discount Rate (MDR), a fee that the recipient bank collects from the merchant.
Also watch a related video on Consumer Price Index by Vivek Singh Sir, our faculty for Economy:
Significance
- Accepts transactions as small as one rupee.
- Absence of Merchant Discount Rate (MDR) makes it popular among small businesses or vendors.
- Smartphones are the only need for UPI transactions.
- Reduction of hassles and overheads for the bank, thus saving cost.
- Secure transactions, as it has a dual security layer, the mobile personal identification number (MPIN), and one more PIN for every UPI transaction.
- QR code scanning involves no risk of someone having tampered with a static QR code, thus a great boost to security and trust.
| Additional Information About NPCI National Payments Corporation of India (NPCI) is an umbrella organization for operating retail payments and settlement systems in India. It is an initiative of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India. It has been incorporated as a “Not for Profit” Company under the provisions of Section 25 of Companies Act 1956 (now Section 8 of Companies Act 2013), The Company is focused on bringing innovations by the use of technology for achieving greater efficiency in operations and widening the reach of payment systems. |
Source: The Hindu
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