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The Reserve Bank of India (RBI) has launched UPI123Pay, a new initiative to help 400m legacy mobile phone users connect to its real-time payment system.
UPI123Pay is an app-based service that enables Indians to make payments via the country’s successful Unified Payments Interface (UPI).
The initiatives “are envisioned to accelerate the process of digital adoption in India, by creating a richer and inclusive ecosystem that can accommodate larger sections of population”, the reserve bank said in its announcement.
UPI has been a remarkable success. In just three years it has grown from around 5bn annual transactions in the year ending March 2019, to an expected 45bn for the year ending March 2022.
Not only has UPI become the largest instant payments system globally in terms of absolute transaction volume during this period, it has played a vital role in improving financial inclusion in the country with the number of transactions per capita rising from four to 33.
However, to date, UPI mostly runs via an application on smartphones. According to the latest statistics, there are currently 1.18bn mobile users in India, with around 740m people using smartphones.
It means there is still a large portion of customers, around 400m, who cannot connect to the service because of the type of phone they have.
Four ways to pay
The introduction of UPI123Pay has created four additional ways that customers can use UPI to send instant payments.
For instance, Indians can now download an app on their feature phone that enables them to use several UPI functions that are currently available on smartphones.
They could also make payments by ringing a number displayed at a merchant site, after which they will receive an incoming call to authenticate the transaction by entering their UPI PIN. The so-called “missed call” feature will allow feature phone users to perform routine transactions such as receiving and transferring funds, making regular purchases and bill payments.
To address often unreliable internet access in the country, a third option enables consumers to access UPI services via pre-defined interactive voice response (IVR) numbers.
This requires users to initiate a secure call to a predetermined number and complete UPI onboarding formalities to be able to start making financial transactions without an internet connection.
Finally, Indians could make proximity sound-based payments by using sound waves to enable contactless, offline and proximity data communication on any device.
UPI123Pay is the latest in the line of the country’s efforts to increase the usage of UPI by extending it to feature phone users and smartphone users who have no access to the internet.
Indians with feature phones could previously access basic payment services on UPI through typing a short code (*99#), but the process proved to be cumbersome and failed to gain widespread adoption.
To ensure that UPI can continue to grow, the RBI has been researching potential solutions in recent years to bring UPI to feature phones and enable offline payments.
“We are very hopeful and very positive that this suite of products that we are going to introduce today will fill in this gap and take UPI to the next level,” RBI deputy governor T. Rabi Sankar said at the inaugural event.
Together with UPI123Pay, the RBI also launched a 24x7 helpline to assist digital payment users across the new services.
