The World on a QR Code: How UPI Changed the Payments Space
Picking up a packet of sweets at the airport on a flight home from Kolkata recently, I asked the person at the counter how he wanted me to make the payment. The Quick Response (QR) code came out, and within seconds payment was made through an app directly from my bank account using the Unified Payments Interface (UPI) system. It’s so convenient, with no hassle of giving change or waiting for connectivity on the point-of-sale (POS) machine, the person at the counter told me with a smile. By any measure, the UPI interface is quickly proving to be a huge game changer in the payments space. The characters tell the story. In just six years since the National Payments Corporation of India (NPCI) rolled out the UPI system for payments, it has captured 16% of total retail payments, with merchants adopting an impressive 30 million UPI QR codes. In July 2022 alone, as many as 6 billion transactions were processed through UPI, the highest since 2016. The value of transactions processed in 2021-22 through UPI was a whopping Rs 84.15 lakh crore, five times the amount of debit and credit cards. combined.
In our cover story, Anand Adhikari brings you the details of the massive disruption that is being seen in the payments space thanks to UPI. From a vegetable vendor to a cafe to a high-end restaurant in a five-star hotel, the QR code is everywhere, reducing reliance on debit cards and cash, and even credit cards are expected to be disrupted in the future. close. As Ritesh Shukla, CEO of NPCI International Payments Ltd (NIPL), a subsidiary of NPCI, puts it: “Our competition is cash. There are still many in circulation that we need to get rid of. The next frontier for this indigenous disruptive technology is the $80 billion remittance market, and NIPL is now helping other countries build payment ecosystems and get UPI across borders and accepted. In other countries.
Just as UPI is disrupting the payments ecosystem, India is also building a broad-based e-commerce platform that could change the way digital commerce is undertaken in the country. To make e-commerce more democratic, the Open Network for Digital Commerce, or ONDC, is being built under the overall leadership of the iconic Nandan Nilekani. As Binu Paul reports, most small Kirana stores are excluded from digital and the ONDC will bring small sellers into the digital commerce ecosystem. As Nilekani said recently, ONDC is an idea whose time has come, and there needs to be a way for small sellers to compete in the new world of e-commerce fairly. The domination of the major e-commerce platforms could soon be challenged.
Elsewhere in this issue, Vidya S. examines the growing phenomenon of wealthy individuals moving abroad to establish alternative residences, conduct business or simply seek a better quality of life. The numbers, while not alarming at the moment, could point to a trend that policymakers should take note of.