Within electronic payments, the key is IMPS, which is growing rapidly and likely to see further acceleration after the launch of Unified Payments Interface (UPI) in 2016, as described in more detail below. IMPS provides users with the facility of instant transfer and settlement 24/7.
The UPI payment architecture facilitates 2-factor authentication of payments in a single click/swipe on mobile phones using biometric data already available in the Aadhaar database. This would satisfy the requirements of simplicity, flexibility, and low-cost for potential e-finance users who are currently outside the banking system. In a way, this system would work similar to how the ?Apple-Pay? system currently works in the US where users swipe their mobile phones to pay for various retail transactions. However, UPI has the added advantage in that it works across mobile phone hardware and different operating systems.
Why will UPI work? Simply put, mobile phones are ubiquitous, so too are Aadhaar id?s, with the government having already opened 190m new bank accounts ? or in other words, because of the enabling environment created by the JAM trinity.
Key features of UPI
Simplifying authentication: One-click 2-factor authentication possible using mobile + any other factor (password, PIN, biometricsno
data entry). Since the mobile no. is bound to the device there is no need for a mobile-based password.
- Mobile is "what you have" and password/PIN is "what you know" or biometrics is "who you are").
- India is the only country in the world to offer third-party biometric authentication - Biometrics would do away with the requirement for card/PIN issuance.
Ability to use mobile phones as a primary device for all payments - P2P, C2B, B2C. Benefit: Lower cost as password / PIN architecture is not required.
Ability to use mobile phones for both payments (push) and collect (pull) transactions, including facilities like snooze until 'pay by' date. Benefit: Increases scope of use for regular payments like ECS (backbone of an automated electronic bill payment service).
Payment details need not reveal bank or individual details but could simply be an alias (virtual address), email id or a mobile number residing in the payer's address book. Benefit: Enhanced security.
High interoperability across all payment players, all mobile phones and OS - (JAM trinity of 1bn).
