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UPI-Aadhaar Execution A Litmus Test For Government

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March 20, 2017 in World News


The launch of the Aadhaar-enabled UPI (Unified Payments Interface) by the government recently was a step forward in its march towards a digital India. UPI and Aadhaar are attempting to take India to a cashless, card-less financial system which will change the face of peer-to-peer and peer-to-merchant payments.

However, while this technology is ground-breaking in the sense of the shake-up of the financial system it will result in, implementation of the plan is the key.

End of An Era?
UPI has the potential to change the way the world banks and pays, as its aim is to simplify merchant payment systems through the use of fingerprints, making the need for current PoS (Point of Sale) machines and its related technology obsolete. It also integrates the user’s Aadhaar details with their bank account, eliminating the need for a payment wallet or a debit/credit card.
The former has a lot of players keen to see where UPI will go, since e-wallet apps like CitrusPay, PayUMoney as well as various banks’ payment wallets have recently made inroads into the wider banking sphere.
While a number of e-wallet players are not too concerned by competition from UPI, this is largely due to the difficulties in the implementation and consolidation of services under UPI. The investment required to educate merchants and train them in the use of UPI would be quite large. In addition, the user experience that e-wallets offer is currently also a more seamless experience for end customers.

UPI Teething Troubles
UPI was rolled out fairly recently, and like all new entrants on the block, it has a few bugs to be sorted out first. At present, UPI functions like a back-end switch that connects banks and enables the transfer of funds. Acquiring a customer base and roping in merchants for Aadhaar-enabled payments is not yet under its purview, and it does not have the infrastructure in place to acquire these two.
Execution of the juggernaut that is UPI and getting various merchants on board is another task that many see as a stumbling block in making UPI competitors take notice of the payment system. Given the government’s poor track record with regard to implementation of such schemes, it remains to be seen how successful the roll-out of UPI across the country will be, especially given the diversity and unique problems associated with different parts of the country.

Constant Innovation
Once an app or system is operational, there is a need to constantly upgrade and improve the user experience in order to retain users and ensure a seamless experience. The adoption of UPI will depend on the availability of biometric readers and their cost, as well as on the distribution of the same across the country.
Keeping up with changes in technology and the changing needs of a fickle consumer base will be the key aspects that will test the system, according to experts.
While availability of biometric readers can be addressed through mobile phones equipped with fingerprint scanners, getting merchants and users on board and keeping them is where UPI will have its hands full.

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