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Monday, October 2, 2017

NPCI to debut Proximity Payments for UPI Transactions


                   As on date, 55 Banks are Live on the NPCI UPI platform. Multiple approaches are in pipeline to enable the remaining Banks to onboard UPI platform.
        

         A large number of Banks live on NPCI UPI Platform will make it attractive for 3rd Party PSPs to roll out innovative UPI products.
        
         UPI transactions can be executed through the App, Website and QR as the payment address needs to be keyed in manually or scanned to successfully complete the Transaction.
        
         There have been a number of instances wherein the wrong VPA was keyed in, and the payment landed in a wrong bank account!!  It was a hectic job, to recall the funds credited to the wrong beneficiary.
        
The QR mode is superior over manual keying mode of the VPA, however in some cases, the QR Code not be scanned, and the VPA had to be keyed in manually.

To overcome the barriers associated with 01) Manual keying of VPA 02) Scanning VPA, NPCI has decided to go for additional payment channels under ‘Proximity Based Payments’.

The new ‘Proximity Based Payments’ channels in UPI will be live in the next 2 quarters.

As a first step, NPCI has floated a “REQUEST FOR PROPOSAL (RFP) FOR ENGAGING SERVICE PROVIDER FOR PROVIDING PROXIMITY PAYMENTS FOR NPCI”

The RFP focus is on UPI only. The Objective of this RFP: To make available method of payments other than text and QR to the end customers, which will expedite the payment process as well reduce complaints.

Remote and Proximity payments in UPI are currently done only by entering the VPA or scanning a QR within the App or a web site, which limits the possible methods in which payment can be made.

Banks have been implementing various proximity payment solutions in their existing non-UPI apps but have not been able to extend it to their UPI apps as there are no standardization sets and the current implementation limits them to work with their own PSP apps only.

NPCI has been getting requests from various proximity payment players on taking their products and having them embedded within NPCI library or environment and/or certified by NPCI to be implemented within BHIM App or other UPI Apps.
Hence, the above RFP is expected to fill the gap and A) reduce complaints associated with wrong payments B) increase transactions routed through UPI c) provide a platform for FinTech companies to be part of India’s digital transactions platform.

The main requirements for Proximity Payments are the presence two devices to complete the financial transaction.Proximity Payments are equal to ‘Card Present’, transactions.

In India, the NFC based payments did not take off to various reasons.

The best examples of Proximity Payments are Apple Pay, Samsung Pay, Android Pay

Through this RFP, NPCI intends to introduce the benefits of proximity payments to UPI transactions.
UPI has gained acceptance since its launch and more and more bank customers have understood the benefits of UPI.

Introducing Proximity Payments will add an additional security layer and reduce the last-mile friction.

The RFP states that the following:-

Solution:
The Bidders need to develop a solution for proximity payments where the mechanism for transfer could be anyone of the below however not limited to the following.
1. Sound
2. Tone
3. NFC
4. RFID
5. UHF
6. Location based payments

The Bidder/solution provider would need to have a fair understanding on UPI and also would need to provide solutions which addresses the below concerns as well.

a)   Multiple VPAs configured.

b)   Storage of VPA

c)   Functioning of proximity payments in case the app is not launched & battery optimization.


d) Payments between un-intended devices.


Proximity payments via UPI will encourage merchants to adopt UPI quickly.

One of the major drawbacks in the present UPI process is that intentionally a wrong VPA may be provided by the store staff to the customer. This leads to payment to a person other than the merchant.
Through Proximity Payments, this can be avoided.

The ‘Collect’, option is not preferred for onsite payments, as the time taken to complete the transaction is more.

The same applies to ‘QR Code’ option too. In case, the store staff shows a wrong ‘QR Code’, to the customers, the payment will land in the wrong bank account.

Service Charges –

No charges for P2P transactions
Solution Provider may charge for P2M transactions

It is not for a single service provider to provide all the methods of proximity payments. NPCI may choose different vendors for each proximity payment channel.

5 Benefits of Proximity Payments being part of NPCI UPI

Benefit No 01) – Introduce the Joys of proximity payments to Digital India.
  
Benefit No 02) – Enhance the confidence levels of merchants to adopt UPI

Benefit No 03) – Reduce complaints associated with wrong payments, time-outs, etc

Benefit No 04) – Increase the number of UPI transactions

Benefit No 05) – Increase the turnover rates for P2M transactions

Benefit No 06) – Enable Banks to launch ‘Cash Management Products’ based on UPI

Benefit No 07) – Ensure quick adoption of proximity payments channels to other financial products

Google TeZ is a trailblazer in UPI based proximity payments.  



Good to read articles:
MoboMoney takes sound-based mobile payments to India

A new approach to digital payments - Ultracash



         

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