NPCI launches UPI 2.0 and here's what you need to know about the upgraded version

UPI 2.0, an upgraded version of the Unified Payments Interface (UPI), offers new features to ease digital transaction for users.

After a delay of several months, Indian retail payments organisation National Payments Corporation of India (NPCI), in a closed-door event with industry players, released UPI 2.0, the upgraded version of the Unified Payments Interface (UPI).

Urjit Patel, the Governor of Reserve Bank of India, was present at the gathering to launch the upgraded payment infrastructure.

Nandan Nilekani, Co-Founder and Non-Executive Chairman of Infosys, said,

“UPI architecture allows you to bring innovations at the edge. The RBI has done a commendable job in spearheading the account aggregator structure.”

Speaking on the occasion, Rajnish Kumar, Chairman of State Bank of India, said,

"Thanks to UPI, India's payment infrastructure is simple and seamless. UPI has done a commendable job in integrating with global giants like Google and WhatsApp. I am really proud that SBI has been associated with UPI since the beginning and at the forefront in leading this payment revolution in the system."

WhatsApp’s recent entry into payments has been mired in controversy with government officials asking the messaging behemoth to set an operating office in India, before launch. A plea has been sent in this regard to the Supreme Court, as per media reports.

Earlier in July, YourStory broke the news of additional features in which it stated that UPI 2.0 will allow linking of overdraft accounts; blocking payment through one time mandate; and sending invoices with payments. [Read more here]

A source close to the development had then told YourStory, “Most of the features are designed for P2M. I guess the requirement is that P2M players need to scale up with the UPI infrastructure.”

In a tweet, the NPCI confirmed the following new features in the upgraded payment infrastructure UPI 2.0:

Over draft account 

UPI 1.0 allowed users to link only saving accounts. The upgrade will allow the users (i.e., the merchants) to link their overdraft (OD) accounts to UPI, enabling them to continue withdrawing money even if the account doesn't have sufficient funds. This will allow merchants to take credit through these OD accounts.

Earlier YourStory learnt that OD accounts without collateral backing will have separate transaction pricing.

One-time mandate  

A new addition to UPI is the one-time mandate essentially allowing users to block a certain amount in the customer’s account balance. The transaction will go through after the goods and services are delivered.

Essentially enacting a CoD (Cash-on-Delivery) transaction, this will be a key feature for ecommerce players who are reportedly looking to integrate this feature actively. Some of the key names include Flipkart, MakeMyTrip as well as BookMyShow. In such a case the consumer will have to create the mandate on the merchant’s website.

This feature can find another used case in digital gifting. In terms of consumer flow, for a P2P transaction the payer needs to create a mandate, with the details sent to the payer through messaging apps.

Invoice in inbox

The new UPI mandate will allow individuals or merchants to send an invoice along with a payment request in the Inbox. This helps create transparency. This helps customers to check the invoice sent by merchant prior to making payment.

The new upgraded version of UPI has also increased the transaction limit to Rs 2 lakh per transaction.

Signed Intent & QR 

Razorpay CEO and Co-founder Harshil Mathur says that the new signed Intent and QR feature, a part of UPI 2.0, has made QR-based payments more secure on the platform.

In a statement, NPCI said this feature is designed for customers to check the authenticity of merchants while scanning QR code. It notifies the user with information to ascertain whether the merchant is a verified UPI merchant or not. This provides additional security to the QR as well as intent. Transactions are processed faster as app passcode is not required in case of signed intent. It also negates the chances of QR tampering. Customers will be informed in case the receiver is not secured by way of notifications.

Harshil further adds, “Though the recurring payments feature is missing, UPI 2.0 comes with several improvements. It allows merchants to process seamless refunds, send invoices with transaction details, and block a certain amount of money in the consumer’s account and debit it later. All of these have been concern areas and requirements for merchants and with the addition of these new features, we are expecting to see a surge of UPI transactions in areas such as hotel booking, flight ticket purchases among others. Currently, UPI drives about 8-9 percent of our transaction volumes.”

Over the past few months, private payment players have shown their disappointment on the omission of ‘recurring payments’ from the UPI 2.0’s feature stack. The expected feature would have helped the credit industry to pull amounts due and made payments more seamless.