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After powering India to become the world’s most prolific user of digital real-time payments, RBI and NPCI are looking to make UPI even more powerful in the coming months with a slew of innovations.
So, in this blog, we are going to discuss these new UPI innovations and the vision of NPCI and RBI in developing them. We will also explore the impact they are likely to have in the short, medium, and long term for Indian businesses and citizens alike.
Latest UPI Innovations
The 5 major innovations in UPI that we are going to speak about today are –
- In-app UPI flows
Enable business applications to allow <5 seconds, native and seamless UPI payments to their customers, without needing to redirect to a UPI app. - Promotional QR for UPI Autopay
QR codes for offline or online promotions to link directly to UPI Autopay mandate creation. This makes customer acquisition easier for subscription-based businesses. - Improved UPI Lite
This innovation adds more value to UPI payments by allowing customers to transact on UPI via NFC. It enables payments even when internet connectivity is inaccessible. It allows payments up to ₹500 and a 2.5x increase over the previous limit of ₹200. - Conversational UPI
AI-driven UPI transactions based on conversations with chatbots, adding a new layer of embedded and conversational payment acceptance.
In-App UPI Payments
Many view the in-app UPI payments as the next generation of mobile-first UPI payments after UPI Intent. The in-app UPI flows will allow businesses to collect payments from customers directly from their applications. So, with the removal of the intermediary UPI application, customers can expect faster and smoother payments. Also, there could be fewer failures or pending payments with this new UPI innovation. Therefore, businesses can expect higher conversion rates with < 5-second checkouts. Moreover, since the payment will be on their own platform, they will have greater visibility of the user experience. This will enable them to track user drops and cart abandonment rates more closely. It will also help to better optimize the experience for their users and customers.
Pros:
- < 5-second checkout for customers
- 10-15% higher success rates
- Greater control and visibility for businesses
Future Impact:
This is likely to be how a majority of UPI Person-to-Merchant (P2M) payments are going to be processed in the medium and long-term future. The added convenience and the removal of the underlying dependence on UPI apps make this mutually beneficial for end-users and businesses alike. In the short term, we expect this UPI innovation to ramp up to cover at least 10-20% of all payments accepted via mobile applications by the end of the current financial year.
So, are you interested in offering In-app UPI to your customers? Cashfree Payments’ offering in this space, Flash UPI, is live. Kindly express your interest in Flash UPI by clicking the button below. (Also Read: What is Flash UPI)
Promotional QR for UPI Autopay
Growing digital-first businesses have faced challenges in driving customer acquisitions through offline and online advertising. The challenges are all the more when their CTA requires customers to download an application and get on board. These applications usually have multiple products and services bundled together. This makes it harder for those viewing the ads to find the offer or service they were looking for. As a result, it is hard for them to track the impact of their promotions. It is even more difficult for them to optimize conversions from such expensive promotions. To solve this problem, NPCI is releasing a Promotional QR offering that drives customers directly to set up a mandate for UPI Autopay. Therefore, this will make the acquisition from digital and offline ad campaigns easier for these businesses.
Pros:
- Easy, < 30-second mandate-creation flow
- Simpler tracking and attribution of sign-ups from campaigns
- Up to 40% higher return on ad spends (ROAS)
Future Impact:
With several festivals and major sporting events such as the 2023 Cricket World Cup coming up, brands would be looking to find ways to promote their businesses and acquire more customers through promotional activities. The use of the Promotional QR, another UPI innovation would make this substantially more rewarding. We expect that e-commerce and OTT businesses to use this functionality greatly in the weeks and months ahead.
Generate a Unique QR Code for Multiple Branches of Your Business
Are you interested in offering a Promotional QR for UPI Autopay offering for your business? Kindly express your interest in the Promotional QR for UPI Autopay below.
Improved UPI Lite
The NPCI launched the UPI Lite, an on-device wallet in September 2022, enabling users to make single-tap payments. They need not enter a UPI PIN or interact with the core banking system. Users need to load some value into a wallet on their preferred UPI PSP. Then, they can make quick payments with near 100% success rates since this works even when the bank’s systems are down. Until recently, this had a limit of ₹200 per payment without a PIN. The NPCI has now extended the limit to ₹500. Further, to enable UPI Lite to be used even in spots with limited mobile internet connectivity, UPI Lite can now work via NFC to complete payments.
Pros:
- ~15% of all UPI P2M payments are <₹500
- Almost 100% success rates since payments aren’t in real-time
- NFC will enable offline use
Future Impact:
In the short term, this will help customers make faster and more seamless payments at stores to pick up small items. For example, groceries and snacks. However, with NFCs and wallets being involved, the long-term future of this use of NFC technology could open the door for contactless sales and automated stores. Thus, the people may pick up what they require and walk out. They can make payments seamlessly through the store’s systems by speaking to their smartphone in their pocket with this UPI innovation.
Conversational UPI
The RBI Governor announced Conversational UPI along with the improvements in UPI Lite in August 2023. The proposal aims to enable users to engage in conversation with AI-powered systems to make payments. While the NPCI has yet to develop this comprehensively, the announcement shows its vision for UPI innovation. This will allow users to make payments while conversing with AI-powered messaging or chat systems in a safe and secure environment. Conversational UPI will perhaps be usable in both Hindi and English initially, before being used in other languages.
Pros:
- Greater accessibility, especially for new-to-digital-payment users
- Vernacular expansion of UPI to increase user base
- A more convenient way to pay
Future Impact:
This is the most future-looking announcement made by RBI with respect to UPI. The expectations are high on what this might mean for the Indian economy and payments ecosystem. With the advent of generative AI, ChatGPT and their competitors, many have posited that the Internet’s future is more conversational. Adding the functionality that enables payments while conversing with chatbots could be the future of e-commerce. It shows how progressive NPCI and RBI are by showcasing this vision and building towards it.
So, what do you think the future of UPI will look like? Even the most optimistic among us could not have predicted UPI’s meteoric rise to digital payment dominance in India. This just makes it harder to understand its future and what that might look like.
But with the RBI and NPCI announcing such exciting developments for the entire UPI ecosystem, we can safely presume that UPI innovations will continue to make it easier for Indians to make digital payments for decades to come.
