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India’s digital payments journey has evolved significantly, particularly with the advent of Unified Payments Interface (UPI) developed by the National Payments Corporation of India. UPI has transformed the way we pay, allowing millions of users to instantly transfer money with just a simple identifier— their UPI ID. From the roadside vendors that use QR codes for payment to major corporations adopting UPI into their systems, the technology has come to form the backbone of India’s cashless economy, boosting financial inclusion and convenience.
With UPI growing, NPCI continues to improve the offering with features that are beneficial to all stakeholders. One of these innovations is the UPI One time Mandate also referred to as UPI ASBA, BHIM ASBA, or UPI PreAuth.
What is UPI One-Time Mandate (OTM)?
UPI One-Time Mandate (OTM) is a payment feature that provides merchants with the facility to reserve or block a particular transaction amount in a customer’s bank account without debiting it immediately.
Unlike normal UPI payments in which the amount is charged immediately, OTM enables a merchant to reserve funds and enables them to subsequently –
- Collect the complete amount
- Collect a partial amount
- Or void the transaction completely – depending on how things go.
It’s best suited for transactions that have some degree of uncertainty, like IPO applications, ticket reservations, or preorders.
From the customer’s point of view, this is assurance – no upfront payment and no delay in refunds.
A Real-World Example : IRCTC Waitlisted Tickets
Consider booking a waitlisted ticket of a train on the IRCTC system
At present, you pay the full amount, i.e., INR 1000 upfront. In case the ticket doesn’t get confirmed – the process of refund begins and that can take days!
This is where UPI OTM comes in handy –
Booking: You book waitlisted ticket, and IRCTC sends out a request for ₹1000 mandate. You accept the same on your UPI app (Google Pay/ PhonePe) and the amount gets blocked – not debited.
Confirmed Ticket: When the ticket gets confirmed, IRCTC collects the ₹1000.
Waitlisted Ticket: When the ticket does not get confirmed, IRCTC cancels the mandate and the ₹1000 gets released immediately.
Cancellation of Ticket: When the ticket got cancelled by you, IRCTC retains service charges, say ₹100, and the balance of ₹900 gets released.
This flexibility makes UPI OTM a standout feature, giving merchants payment security while keeping customers in control of their funds.
How does UPI OTM Work?
Let’s break it down from both the customer’s and merchant’s perspectives.
For the customer
- Mandate Request: At checkout, you select your UPI app (intent), enter your UPI ID (collect), or scan a QR code to receive a mandate request.
- Approval: You enter your UPI PIN to approve the mandate. The amount approved is simply blocked – not deducted.
- Outcome: If the order proceeds, the amount is captured. If not, it’s released or partially collected depending on the situation.
For the Merchant
- Initiate Mandate: Using a payment gateway like Cashfree, the merchant sends a mandate request when an order is placed.
- Fund Blocking: Once approved, the funds are held until the mandate expires
- Action: The merchant captures the full amount for fulfilled orders, a partial amount for adjustments, or voids the mandate for cancellations.
Business Use Cases for UPI OTM
UPI OTM is a great fit for businesses that need payment assurance before confirmation. Here are some real-world use cases:
- Stock Market & IPO Applications—Investors apply through UPI ASBA ( Applications Supported by Blocked Amount). The funds are debited only if the IPO is allotted.
- Insurance Payments & Policy Approvals – Insurance companies can block the premium amount beforehand and release it immediately if the policy is not approved.
- Electric Vehicle (EV) Charging & Utility Payments—For services where the final amount is not known (e.g., EV charging, metered utility consumption), UPI OTM ensures that the customers have sufficient funds while allowing merchants to deduct only the amount charged.
- Hospitals & Healthcare Services – In situations of uncertain insurance cover, hospitals may establish OTM to retain an estimated sum, allowing patient discharge even before final claim is approved by the insurer.
- Security Deposits for Rentals & Leases – Companies renting cars or gadgets can block a refundable security deposit and charge only in the event of damages.
- Travel & Hospitality – Block funds for hotel reservations, flight bookings, and cab rentals, ensuring payment security while allowing flexibility in modifications or cancellations
- Limited-Stock & High-Demand Product Sales – For product launches (e.g., limited-version shoes, gaming consoles, flagship phones, or event tickets), sellers can block the funds in advance and receive payments only if the order is confirmed.
Why Businesses Should Adopt UPI OTM
For businesses that want to ensure a great customer experience, reduce refund-related operational hassle, and maintain payment assurance, UPI OTM is a game changer. Cashfree Payments offer a quick and seamless integration that allows you to offer UPI one-time mandate creation.
Best Practices for Merchants
Communicate transparently
- Inform buyers that a mandate is not an immediate charge, but a temporary hold..
- Give clear timeframes for mandate execution or void
- Keep buyers in the loop at all points during the mandate journey
Optimise Management
- Pick suitable validity periods based on your need
- Set up automated workflows for mandate capture or cancellation
- Review pending mandates often to ensure timely processing.
Establish Trust
- Be open about the highest amount that’ll be held.
- Lock funds for bookings in hotels, flights, and cabs to secure payments while also providing flexibility to modify or cancel
- Honor Cancellation policies and void mandate immediately when cancelled
Get Started with UPI OTM on Cashfree
As a leader in the UPI payments space, Cashfree Payments is committed to driving innovation in digital transactions. If you’re a business looking to implement UPI One-Time Mandate, get in touch with us today and revolutionise your payment experience.
