Time to Go Beyond UPI and help Digital Transactions Grow with UPI 2.0

By Nitin Mittal

UPI 2.0 has the potential to accelerate and drive change at a much faster rate. The challenge that NPCI has taken to expand the service beyond smart phone users to the 500 million-strong feature phone users in India, will help new avenues openup for industries like E-commerce, Travel & Hospitality, Health-care and in particular the Micro-merchant& Retailer segments across the country.

India’s focused on-ground implementation of the Aadhaar program paired with Jan Dhan Yojana is a massive asset which has doubled India’s banked population to 80% by 2017, starting from 2011. Bolstering this powerful mix is theUnified Payments Interface (UPI) introduced byNational Payments Corporation of India (NPCI)in 2016, which allowsfor full-scale interoperability and instant real-time transfer of funds through a mobile number associated with a bank account.

With the COVID-19 pandemic posing unprecedented challenges to micro & small businesses, digitization of payments systems, especially availability of UPI,is proving critical in facilitating immediate access of contactless funds to rural and urban customers alike and helping them buy essentials from merchants. The month of May 2020 alone saw a billion plus UPI transactions and millions of person-to-merchant (P2M) transactions as customers’ inclination to use QR-code based payments rather than cash and cards at retail outletsincreased manifold. This rapidly evolving trend negates the need for erstwhile point-of-sale machines and allows for massive savings in physical distribution, servicing and collection efforts that were previously undertaken by banks.

UPI has proven its worth and benefits. Given the current situation, it is now time to evolve to the next level in this journey and welcome UPI 2.0.

UPI 2.0 has the potential to accelerate and drive change at a much faster rate. The challenge that NPCI has taken to expand the service beyond smart phone users to the 500 million-strong feature phone users in India, will help new avenues openup for industries like E-commerce, Travel & Hospitality, Health-care and in particular the Micro-merchant& Retailer segments across the country.

In 2019, the Central Board of Direct Taxes (CBDT) issued a notification which ordered companies with a turnover of more than ₹50 crore to include the Unified Payments Interface (UPI) and RuPay debit cards as payment methods. It was a firm step ahead in bolstering digital payments in India.A lacuna in the guidelines, however, was evident in the unavailability of a recurring payments option.The upgraded version of UPI resolves this by allowing for a one-time mandate with block functionality wherein customers can pre-authorize a transaction and paylater on a pre-decided date which could be harnessed by e-commerce players both for B2B and B2C transactions for payment on successful delivery.

Individual users and small merchants will benefit tremendously from these features, as mandates are generated instantly, and payments get deducted automatically on the authorized date creating a ‘pay-later’ feature of sorts for the customer.

So far, users were able to link their savings and current accounts to UPI. UPI 2.0 allows users to access their overdraft accounts, offering need-based, short-term credit facilities with the transaction limit also now doubled to INR 2 lakh.To reduce the physical collection efforts of the BFSI industry, UPI 2.0 can add a significant push to the digital collection of small-ticket loans by running cyclical processes for collection request generation. Auto-generated EMI statements with collection requests can be sent for customers’ verification, post which the customer can authorize the transaction for instant EMI repayment.

Interestingly, the new UPI 2.0 also features additional security for customers. The upgraded construct allows for the dispatch of online invoice to the customer from the merchant, hence transferring the power of ‘verification of order & amount’ to the customer before paying the merchant. Also, to improve authenticity of transactions and merchants registered with the UPI ecosystem, customers can check the authenticity of merchants while scanning the merchant’s QR code, limiting the possibility of fraudulent transactions.Digital invoicing at micro-level will also allow for aggregation and analysis of data at merchant level and provide invoice financing solutions.

With the COVID-19 ‘new normal’ here to stay and innovative solutions like UPI set to be launched on feature phones, India will move closer to its 100% financial inclusion dream and accelerate the growth of thousands of micro-entrepreneurs across the country.

There is evident need to fast-track the adoption of UPI 2.0. As of now, UPI 2.0’s certification is still underway, and PSPs are yet to implement it. Considering the fast-paced nature of technology development and the importance of a robust & novel payment system like UPI especially for micro and small merchants, the government must facilitate a faster rollout of technical specifications with stakeholders like NPCI, PSPs and banks and accelerate the implementation, reach and adoption of UPI 2.0.

Article first published on: https://bfsi.economictimes.indiatimes.com/blog/time-to-go-beyond-upi-and-help-digital-transactions-grow-with-upi-2-0/4388

Digital transformation – a need for MSMEs

The Micro, Small and Medium Enterprises (MSMEs) sector has traditionally been the backbone of our economy. However, over the past few years, the MSME sector has started confronting some challenges, including country’s shift to GST tax regime, lack of technological knowhow, inefficiencies in supply chain and difficulties in availability of funds.

Since businesses aided by technologies deliver better products and services, and save time and money, technological advancements play a critical role in shaping businesses.

This brought to light the need for MSMEs to adopt digital technology enabled platforms as a solution to challenges being faced by these firms. To support this, the government has launched the Digital MSME scheme in 2017, that involved providing training to MSMEs and enable them to overcome the hurdles in digital transformation.

Digital Transformation is a new force that has fundamentally changed how MSMEs operate and deliver value to customers. It has led to smart integration of digital technologies, processes and competencies across all levels and functions.




MSMEs must embrace digital tech to stay afloat

The micro, small and medium enterprises (MSMEs), which have borne the brunt of the COVID-19 pandemic should embrace digital technologies to stay in business and emerge competitive in the post-COVID world.

MSMEs must transform the way they function to be able to continue to produce goods and services during this turbulent time. This can be done by adopting technologies which will not only allow MSMEs to reduce onsite labours but also help them to control their process digitally.

That’s because digital transformation makes businesses more transparent and efficient. It provides opportunities to enhance the customer satisfaction and build great working environment. Resultant, MSMEs can accelerate growth, optimise operations, and create value across organisation. Also, it helps small businesses embrace new technologies to improve their manufacturing process and improve ROIs.

benefits and barriers


Digital trends in the COVID scenario

Customers are willing to shop online for categories like accessories, appliances, apparel and footwear, OTC medicines, snacks, electronics, groceries, etc. Approx. 14% consumers across these categories switched across brands for the convenience of online shopping, with a 50% intent to continue.

This highlights the importance of bringing your small business online, and taking your offerings to customers who are getting accustomed to shopping online.

In addition to this, there is a rise in adoption of digital sales channels, which implies that digital interactions will hold greater importance instead of traditional interactions in the post COVID world.


Survey States:

According to a survey conducted by an IT company Endurance International Group (EIG), about 30% of MSMEs started a business website or enabled e-commerce functionality since the lockdown started owing to the COVID-19 pandemic. More than 50% of MSMEs started using video conferencing tools and WhatsApp to keep business running.

MSMEs are going Digital with India’s trusted B2B platform. Know more.

Silk Map of India

Silk in the Indian subcontinent is a luxury good that carries a long history. Archaeological discoveries in Harappa and Chanhudaro hint towards sericulture present during the time of the Indus Valley Civilization (dating between 2450 BC and 2000 BC). However, certain evidences found for silk production in China dates to around 2570 BC.

Let’s have a look at the Silk map of India, but before that,

Some Quick Facts:

  • India is the second largest producer and the largest consumer of silk in the world after China.
  • About 97% of the raw mulberry silk comes from six Indian states, namely, Andhra Pradesh, Karnataka, Jammu and Kashmir, Tamil Nadu, Bihar and West Bengal.
  • Mysore and North Bangalore are the upcoming sites of a $20 million Silk City.
  • Emerging silk producing districts in Tamil Nadu are Salem, Erode and Dharmapuri.
  • Hyderabad, Andhra Pradesh, and Gobichettipalayam, Tamil Nadu, were the first locations to have automated silk reeling units in India.

Silk Map

Care in Crisis: Precautionary steps to be taken by small business owners against COVID-19

During these unprecedented adverse times, the focus of SMEs should remain on staying safe, supporting their customers to keep the wheels of earning turning.

The novel Coronavirus has forced the entire world to adapt to change quickly. After a considerable lockdown period, workplaces in India are taking a large number of precautions for their employees in the unlock phase.

COVID-19 pandemic has put the spotlight on the renewed need for hygiene and overall facility management to deal with new set of challenges.

While large businesses have the infrastructure and funds to put safety facilities in place, it is the small businesses that face the existential threat and cannot remain closed for long. They are often financially fragile, with little cash or resources.

For small businesses to resume operations, and once again serve as an engine to economic growth, they need to take some precautionary measures for the safety of their staff.

  1. Sanitization and regular cleaning of offices, factories, restaurants, shops, or business facilities is important. For this, following cleaning and disinfecting measures can be followed:
  • Wear disposable gloves to clean and disinfect.
  • Clean surfaces using soap and water, then use disinfectant.
  • Practice routine cleaning of frequently touched surfaces.
  • Surfaces and objects in public places that are touched frequently, such as shopping carts and sale counter keypads should be cleaned and disinfected before each use. Apart from this, high touch surfaces at workplaces include railings, tables, doorknobs, light switches, countertops, handles, desks, phones, keyboards, toilets, faucets, sinks, etc.
  • While disinfecting hard surfaces, keep solution on the surface for at least 1 minute.
  • Electronic equipment at the workplace, such as tablets, keyboards, remote controls, and ATM machines should be wrapped with a wipeable covering.
  1. Make sure that you staff washes their hands at regular intervals, wears gloves and masks, especially if they are facing customers.
  1. Seating arrangement at your facility should be such that two employees have at least 6 feet distance. For shops and stores, ensure that your staff is available for assistance, and customers touching the products is minimal.
  1. Ascertain that the clothes or uniform worn by your staff is washed and sanitized every day, and their temperature using infrared thermometer is checked before they enter the facility.
  1. If your staff is delivering goods to households, practice a no-contact delivery, wherein the delivery executive should be advised to keep the goods at a distance for the receiver to pick them up.

However, disinfecting the more-exposed surfaces is just not enough. Exercising easy communication to educate workers about identifying the symptoms of COVID-19 is equally important. Explain the importance of washing hands, wearing masks and gloves, and cooperating with ASHA workers who visit the house or store to conduct tests for coronavirus symptoms. Also, instructions on what to do if they develop symptoms within 14 days after their last possible exposure to the virus must be provided.

On Premise precautions

It cannot be denied that one of the prime sources of exposure to COVID-19 for small business owners could be their buyers, sellers, or supply chain staff. It needs to be understood that it is not just one person but the whole ecosystem at the back end around the individual, which consists of their family who have to be safeguarded.

To do this, business owners can take the below mentioned steps:

  • Monitor delivery and supply chain staff: Temperature check or thermal-scanning before entering the facility should be made mandatory for staff and customers.
  • Protective gear: Masks and hand gloves must be worn by the staff that is into customer facing roles. Customers must also be asked to wear masks covering their nose and mouth. Also, shoe covers should be provided to the customers while entering the malls, marts or supermarket.
  • Sanitization booth: A supermarket or a mall that allows customers to help themselves should install sanitization booth with foot pumps for people to pass from or place contactless sanitizer dispensers in order to minimize the spread of virus. Also, a PPE clad security person can be appointed to ensure that people are adhering to the guidelines, post which, used PPEs should be responsibly disposed.
  • Social distancing: Healthy distance of at least 4 to 6 feet should be maintained from the customer by creating a sealed area right in front of your counter/sales staff facing spaces.
  • Make Arogya Setu App installation mandatory for people entering your premises: Aarogya Setu App is a COVID-19 tracker launched by the Government of India. It keeps the user informed if they have crossed paths with the positive COVID-19.
  • Promote online payment: Instead of using cash for receiving or making payments, modes of digital payment like mobile banking, internet banking, cards, etc. should be encouraged.

Precautions while dealing with customers