Project Dissertation Report on

STUDY OF UPI PAYMENT SYSTEM

SUBMITTED BY:
MAYANK PAREEK
2K21/EMBA/28

UNDER THE GUIDANCE OF:

DR. VIKAS GUPTA

ASSISTANT PROFESSOR

DELHI SCHOOL OF MANAGEMENT

Delhi Technological University

Bawana Road Delhi 110042

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 CERTIFICATE

This is to certify that the dissertation report titled a “STUDY OF UPI PAYMENT
SYSTEM” in Delhi is a Bonafede work carried out by Mr. Mayank Pareek
(2k21/EMBA/28) of EMBA 2021-23 and submitted to Delhi School of
Management, Delhi Technological University, Bawana Road, Delhi-42 in
partial fulfilment of the requirement for the award of the Degree of Masters of
Business Administration (Executive).

Signature of Supervisor Signature of Head

(DSM)

Seal of Head
Place:

New Delhi
Date: 9-12-2022
 DECLARATION

I, Mayank Pareek student of the MBA (Executive) 3rd Semester batch declare
that the project work entitled “STUDY OF UPI PAYMENT SYSTEM” being
submitted to Delhi School of Management (DTU), Delhi is an original work is
done solely by me and best of my knowledge and has not been submitted, in
part or full, to any other university or institute for the award of any degree or
diploma.

MAYANK PAREEK

(2K21/EMBA/28)

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 ACKNOWLEDGEMENT

Words are indeed inadequate to convey my deep sense of gratitude to all those
who have helped me in completing this Term project to the best of my ability.
Being a part of this project has certainly been a unique and a very productive
experience on my part. I am thankful to Dr Vikas Gupta for making all kinds
of arrangements to carry out the project successfully and for guiding and
helping me to solve all kinds of queries regarding the project report.

The supervision and support that she gave truly helped the progression and
smoothness of this project. The co-operation is much indeed appreciated. Her
systematic way of working and incomparable guidance has inspired the pace
of the project to a great extent.

Last but not the least I would like to express my gratitude towards my parents
& friends for their kind co-operation and encouragement that helped me in
completion of this project.

Mayank Pareek

(2K21/EMBA/28)
 EXECUTIVE SUMMARY

Studying the unified payment interface (UPI) payment system is the topic of this study.
UPI is a system that enables sending and receiving money across banks. It was created by the
National Payments Corporation of India (NPCI), and the Reserve Bank of India oversees its
regulation. The BHIM-UPI software, which is based on the IMPS infrastructure, enables users
to immediately transfer money between any two parties' bank accounts. A client's various
bank accounts may be connected to the UPI app. By scanning a QR Code including the account
number, IFSC code, or MMID (Mobile Money Identifier) Code, users of the BHIM app can send
or receive money to or from UPI payment addresses as well as to non-UPI-based accounts.
Payment Service Providers are banks that are listed by NPCI on the UPI application (PSP). PSP
refers to banks that have their own mobile applications to make transactions easier. Issuers
are banks who rely on third-party software for UPI transactions because they don't have their
own payment interface. In this essay, an effort is undertaken to gauge public knowledge of
the unified payment interface and the criteria consumers use to choose their preferred digital
payment method. This research was carried out to see whether UPI was being used in money
transfer systems. To the fullest extent possible, both primary and secondary data have been
utilized in this paper to achieve the goals.

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 CONTENT

Chapter Details Page No.

no

Declaration ii

Certificate ii

Acknowledgement Iv

Executive Summary v

1 INTRODUCTION 7

1.1 Background 11

1.2 Significance of the Study 36

1.3 Need for the Study 36

1.5 Aims and Objectives of Study 36

2 LITERATURE REVIEW 37-40

3 RESEARCH METHOLOGY 41-43

4 DATA DESCRIPTION AND 42-52

ANALYSIS

5 SUMMARY AND CONCLUSION 53-54

6 RECOMMENDATIONS 56

7 BIBLIOGRAPHY AND 57
REFERENCES

8 ANEXXURE-1 59
 INTRODUCTION

The National Payments Corporation of India created the Unified Payments Interface
(UPI), a real-time instant payment system, to make cross-bank transactions easier. UPI
operates by transferring money between two bank accounts on a mobile platform in real-
time and is governed and overseen by The Reserve Bank of India. India has experienced
relatively gradual but steady growth during the past ten years. UPI (Unified Payment
Interface) is one of the strategies developed in E-Payments to digitalize the current
Banking system. India has the second-largest population of any country, but a big number
of individuals still don't have a bank account or don't know how to use the simple and safe
financial services. However, a low literacy rate and unidentified factors caused some
people to avoid utilising or have trouble using banking services. Therefore, we had to
solve these problems and simplify the payment process. The Pradhan Mantri Jan Dhan
Yojana, which launched in August 2014, greatly expanded the number of participants and
made it easier for people to access banking and financial services.
Some of the challenges currently India facing in E Banking sector are

• According to the RBI data, number of E-transactions increased from 6 per person per year
in 2016 to 22 per person per year.
• Around 1 crore plus stores have card acceptance infrastructure but currently 6 lakh stores
are providing this facility, and only 3% Indians have formal credit or debit card.

Government of India established NPCI (National Payments Corporation of India) in 2009

to increase the adoption, use, and security of electronic banking.

The Reserve Bank of India (RBI) and the Indian Bank Association (IBA) provided
direction and support for the establishment of NCPI, which oversees all E-payments
modalities and procedures in India (IBA). Following the launch of NPCI, several
initiatives have been done to streamline and offer a single interface payment system for
all systems. among the main forces are
• Simplicity:
The recipient should be easily found with fewer details, such as his phone number,
Aadhaar number, virtual address, or simply a scannable QR code, so we do not need
multiple details like their Account number, IFSC code, and other bank details when
sending or receiving money. This means that when we want to pay or send money to an
individual or enterprise, it should be quick and hassle-free.
• Global system:
When sending money to someone, it shouldn't be assumed that they both use the same
bank or application or have the same smartphone. The system ought to be widely used and
centralised so that send their money using a simple approach to anyone with a bank
account. Likewise, it should provide full interoperability across various system identifiers,
including QR codes, Aadhaar numbers, cellphone numbers, and new virtual payment
addresses.
• Security:
The most important component of any payment system is security. The parties concerned
must be protected from beginning to conclusion. A server's ability to read data from a
smart phone must be fully secured. Additionally, for security purposes, the procedure for
transferring or receiving money shouldn't be difficult. With all securities, it need to be
easy to use and convenient.
Cost:
By the end of 2022, there are expected to be over 800 million smartphone users in India,
therefore payment systems should provide a way to fully capitalise on this. Virtual
payment addresses, third-party portable authentication methods like Aadhaar, and the
usage of mobile phones as authentication (credential capture) devices should make it
possible to reduce costs on both the issuing side and the acquiring side. This enables all
smartphones to serve as the primary payment device in conjunction with other third-party
authentication, allowing banks and other financial-oriented businesses to concentrate on
their core competencies.

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The Reserve Bank of India (RBI) established the National Payment Corporation of India
(NPCI) as a controlling and regulatory body to create low-cost retail digital payment
systems as part of its long-term ambitions to encourage digital payments in India. In
August 2016, NPCI unveiled the Unified Payment Interface (UPI), a ground-breaking
digital payment system that uses the user's mobile phone to link to their respective bank
accounts and serve as an address for sending and receiving money. To make mobile
phones everyone's primary method of payment and to create a centralised digital payment
system in India, UPI takes advantage of the country's high teledensity.
The project's goal is to formally analyse the technology behind UPI and the benefits it
offers over other digital payment systems currently in use. UPI has grown quickly, which
can be ascribed to the growing ecosystem supported by banks and growing user adoption;
nonetheless, for these early adopters, the major application has been to send money from
one person to another. It is essential to develop merchant-centric UPI payments systems
for UPI to realise its full potential. The technological architecture, transactional
procedures, and security mechanisms of UPI are explained in this article, which can be
used to create creative business solutions. India currently lacks sufficient digital payment
acceptance infrastructure for businesses, but business-focused UPI solutions could solve
this gap.
UPI can serve as a case study for both rich and developing nations looking to implement
an affordable, universal digital payment system.

2. Background

The principal piece of legislation controlling India's payments systems is the Payments
and Settlements Systems Act, which is administered by the Reserve Bank of India.
The RBI has focused on encouraging digital payments and reducing India's reliance on
"cash" since the last ten years. The aim for RBI to change the payments environment in
India is aptly summed up in the five-yearly RBI Direction Documents, which define the
tone and vision for attaining major objectives in the payment’s ecosystem. “To proactively
encourage electronic payment systems for ushering in a less-cash society in India and to
ensure payment and settlement systems in the country are safe, efficient, interoperable,
authorised, accessible, inclusive and compliant with international standards.”

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India's payments ecosystem underwent significant changes during the 2016–17 timeframe
as a result of drastic policy changes, the introduction of new payment methods, and quick
changes in user behaviour. During this time, demonetization was implemented, and 86%
of the currency notes lost all of their value over night. Paper money became scarce
throughout the demonetization process, and long lines formed at ATMs and banks to
withdraw the scant amount of accessible cash. Despite the quick adoption of new currency
notes and the use of digital modes of payment, business and trade nearly came to a
complete halt, and the GDP growth rate fell. A significant portion of the populace that
used smartphones quickly adopted mobile-based digital wallets in the year before
demonetization. New age private technology companies were significantly responsible for
the development of mobile-based digital wallets. The Reserve Bank of India gave National
Payments Corporation of India (NPCI) a clear directive to lead the development of next-
generation digital payments during that time, and they set out to develop a new payment
system called Unified Payment Interface (UPI). On April 11, 2016, the then-RBI
Governor publicly inaugurated the Unified Payment Interface (UPI) and made it available
to the general public.

The Reserve Bank of India has been steadfastly trying to establish a national digital
payments ecosystem. In this vein, RBI enabled the formation of National Payments
Corporation of India (NPCI) as an umbrella organisation for all retail payments systems
in India with all leading banks as stakeholders/shareholders. NPCI was formed with the
mandate to consolidate and integrate the various systems with varying service levels into
a national uniform and standard business process for all digital payment. The obvious goal
was to use technology to establish a standardised, reasonably priced payment system and
to promote financial inclusion in the nation. UPI was the result of several advancements
made by NPCI over the course of eight years, starting in 2009. The National Finance
Switch (NFS) was standardised, simplified, and implemented for all of the nation's banks
as the first step taken by NPCI in this manner. All of the nation's banks may now interact
digitally thanks to NFS, which established a uniform standard. Currently, NFS serves as
the foundation for the country's biggest domestic ATM network.

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The Immediate Payment System (IMPS) was made possible by NPCI by using the
interoperable layer of NFS. Real Time Gross Settlement (RTGS) and the National
Electronic Funds Transfer System (NEFTS) were the two methods for digital transactions
in banks prior to IMPS (NEFT). Due to their intrinsic constraints, such as high transaction
limits, delayed batch settlement, and predetermined working hours, RTGS and NEFT are
not appropriate for small ticket digital retail payments. As a result, NPCI unveiled IMPS,
a real-time retail payment service that is accessible 24/7. IMPS is accessible by mobile
phone, internet, ATMs, and Unstructured Supplementary Service Data (USSD) on feature
phones and is channel independent. A mobile-based interoperable fund transfer service
supplied by IMPS included a number of players, including banks, telecom service
providers and retailers. With immediate confirmation of the transaction to both the sender
and the beneficiary, the IMPS operates on the principle of immediate settlement.

Since UPI transactions are settled through IMPS, IMPS transactions can be seen as the
forerunner to UPI since they were made possible by mobile phones. In India, bank
accounts and mobile phone numbers are linked. Utilizing this connectivity, mobile users
with bank accounts were given Mobile Money Identifiers (MMID). MMID made it
possible to eliminate the requirement for knowing the recipient's bank account information
in order to send a payment. Users of IMPS could send push payments to recipients using
their phone number and MMID, account number, and IFSC code, or they could request
payments using their phone number and MMID. From Rs. 4.3 billion in 2014 to Rs. 1622
billion in 2016, the value of IMPS transactions increased.

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 IMPS transactions were largely used to transfer money via internet banking;
however, they were unsuccessful for small-ticket retail transactions for two main
reasons:

1) The need to know the bank details or the MMID and Phone number of the recipient.

2) Both the payers and the payees were not connected by a single, interoperable platform.
India's cash-based economy has largely been a result of a lack of digital payment
infrastructure. Although there are plenty of debit and credit card users in India—304
million cards in 2012 and 910 million cards in 2017—the infrastructure for accepting
digital payments is woefully insufficient. Compared to the 12.7 million POS machines in
the USA, there are only 2.7 million POS machines installed at merchant locations
nationwide in India (1.5 million before demonetization), where there are over 20 million
merchants. Due to the expensive price of POS machines, which normally cost around
$2,000, there are not as many of them in India. $120 to $150 for each machine. ATM
machines have become the main location for dispensing cash, which is then utilized for
transactions, as a result of the low adoption of acceptance infrastructure (POS devices) for
digital payments. In this regard, it's interesting to note that the value of debit card
transactions at ATMs is approximately Rs. 26,000 billion annually, compared to Rs. 4,140
billion at POS machines, or vice versa.
Consumer ATM withdrawals are 6.2 times more than customer cash payments to conduct
business with merchants. This is mostly caused by merchants' lack of POS devices. In
order to provide a universal, affordable digital payment system that would enable both
consumers to make digital payments with ease and merchants and enterprises to receive
digital payments cost-effectively without the use of POS devices, UPI was developed.
UPI has just been introduced. In order to compare various payment methods and their
number of transactions, data has been gathered from the government and other agencies.
Information was obtained from newspapers, publications written by recognised analysts,
and electronic journals. The study is therefore conceptual and descriptive in nature.

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 Working Mechanism of UPI

Anyone with a smart phone, an internet connection, and a bank account can send and
receive money via UPI. Figure 2 depicts the entire UPI payment and transmitting process.

• First Step

Download the UPI app from the Google Play store. You are not required to download
your own bank's application; you are free to download and use any other UPI programme
instead.

• Second Action

Use your cellphone number; bank accounts connected to it will be looked up. After
entering the last six numbers of your debit card, the UPI programme will register your
bank account.

• Third Step

The following step requires the user to create a VPA (virtual payment address). Every user
will have a specific ID that is connected to their VPA, which is a unique address like an
email id. M Pin is set for the bank account and bank account. For instance, if you are
utilising If you utilise the Phonepe app, you will receive VPA as
user1demo@ybl,985695826@ybl.

The minimum and maximum daily payments that a user may send and receive are Rs. 1
and Rs. 100,000, respectively. The transactions are not currently subject to fees from
NPCI. The user's bank account statement will contain an IMPS-formatted payment
notification.

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 Fundamentals of Unified Payment Interface (UPI)

As a standard interface or platform for all digital payment systems in India, NPCI created
the Unified Payment Interface (UPI). The UPI Network is owned, operated, provided
services by, and coordinated by NPCI. Mobile phone-based digital payments are made
possible thanks to the Unified Payment Interface and a set of industry-standard
Application Programming Interface (API) requirements. To enable a mobile-based
immediate payment system in India, UPI takes advantage of the widespread use of mobile
phones, as well as the rising popularity of smartphones, data, and the internet. Mobile
phones have become the majority of people's primary means of payment thanks to UPI,
which enables users to send or request money instantaneously from their bank accounts
using a mobile device.

These Virtual Payment Addresses, like abc@xyzbank, act as a person's unique payment
identity and do away with the need for them to reveal their bank information while
transacting. UPI replaces the costly and time-consuming practise of issuing cards to a large
portion of the population by making mobile phones the primary tool for authorising and
processing payments. This makes digital payments quite simple. Additionally, everyone
can use digital payments at a cheap cost thanks to a mobile phone that has been
transformed into a low-cost payment acceptance device thanks to a unique payment ID.

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 Key Features of UPI
1. UPI makes it possible to utilise a personal mobile as the principal device for all
payments, including those made from one person to another, to an entity, and from
an entity to another. Users can pay their bills, request payments from/to friends,
retailers, and more via UPI without having to divulge their financial information.
A single UPI app allows customers to combine different financial relationships,
which improves their user experience.
2. Sender (payer) and receiver can both begin the payments (payee). This makes it
possible to "pay" (push) and "collect" from someone using a personal mobile
device (pull).

3. UPI provides a standard set of Application Programming Interface (APIs) to

enable transactions on UPI platform, thus enabling a fully interoperable system
across all banks, financial institutions and payment systems without having silos
and closed systems. These minimalistic and fully functional Application
Programming Interface (APIs) allows innovations by payment service providers
to build customized payment solutions for businesses and functionality rich mobile
apps for consumers without having to change the core API structure.

4. For safe and secure payments using a personal mobile phone without the need for
any additional acquiring devices or physical tokens, UPI leverages One-click 2-
factor authentication.

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 ADVANTAGES OF UPI OVER EXISTING PAYMENT SYSTEMS

1. Pull-based mobile transactions: Currently, digital payment methods, such as credit cards
and internet purchases, are push-based, meaning that the customer initiates the transaction.
The client cannot initiate a payment request (pull) from the business and then approve and
pay it. Real-time push and pull transactions utilising a mobile phone are made possible
via UPI.

2. Interoperable User Interfaces: UPI enables cross-interface payments, meaning that a

transaction can be authorised on one interface while a payment is requested on another.
For instance, a website may allow a merchant to request payment from a customer, who
may subsequently authenticate and pay using a mobile phone.

3. Abstraction of Bank Information: No account number or other sensitive financial

information must be shared in order to complete a transaction. Users have the option of
creating a special virtual payment address that acts as their own identification while
sending or receiving payments. Since the user is not compelled to provide any personal
data on third party interfaces, this results in secure payments.

Fig 1: UPI APPLICATION INTERFACE, Source: Mobile screenshots

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1. Safety with One Click-2 Factor Authentication: UPI enables transactions with single
click—in which the customer just needs to enter MPIN on the mobile phone to make a
transaction. This is unlike the existing payment systems where you have to enter card
details, usernames, passwords, OTPs etc. on third party devices or websites to make a
transaction. In
UPI the user’s personal mobile phone acts as a single device to authorize and authenticate
the payment.
2. Approach that favours smartphones: India's smartphone-using population will benefit
from UPI's low-cost and widespread digital payment capabilities. To enable digital
payments using UPI, there is no need to develop the consumer-side hardware
infrastructure (cards, etc.). Nearly all adults in India have a bank account and a cell phone.
This pervasive link is used by UPI to facilitate all digital payments in India.

The payer and payee must be on the same platform in order to transact with other mobile
payment systems like e-wallets. Only the beneficiary's payment address is necessary for
UPI, and money is credited to the beneficiary's bank account. Additionally, users must
pre-load funds into their e-wallet accounts in order to conduct transactions. As a result,
funds remain in the wallet account until they are redeemed back into the back accounts.
With UPI, money is directly debited from the payer's bank account and credited to the
payee's bank account without the need for preloading any wallets.

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 UPI Architecture

The unified interface, or common layer, used by UPI was created and is hosted by NPCI.
Through the use of IMPS and the Aadhaar Enabled Payment System, this common layer
coordinates transactions and guarantees settlement across bank accounts (AEPS). Through
standardised Application Programming Interfaces (APIs), banks, financial institutions,
and other organisations that offer UPI services link to the NPCI's unified interface. to
allow transactions from Virtual Payment Addresses without revealing account
information or login credentials. Payment authentication and authorisation in the UPI
system are always carried out utilising a personal phone. Any-to-any interoperable
payments can be made using a standard set of Application Programming Interfaces (APIs)
since this layer offers a single interface (APIs).
All entities consuming UPI services must maintain idempotent behaviour for all
Application Programming Interfaces (APIs), which are all offered as stateless services
over HTTPS with XML input and output (APIs). These Application Programming
Interfaces (APIs) are asynchronous, which means that when a request is made, the answer
is given in a subsequent communication via the appropriate API. This enables the API
response to be returned to the caller quickly following request queuing. The transaction
ID established by the originating point must be used for all request-response correlation
procedures. Customers are required to use the API using a specific transaction ID, and
they must also provide a response API in order to receive a response. This enables the use
of the same Application Programming Interface (API) for both immediate and deferred
payments.
Application Programming Interfaces (APIs) can scale as a result of this without needing
to wait in a blocking manner.

A set of common Application Programming Interfaces (APIs) are made available to

different UPI ecosystem members. A variety of financial and non-financial transactions
can be carried out utilising these APIs (APIs). There are a number of Meta Application
Programming Interfaces (APIs) in addition to transactional Application Programming
Interfaces (APIs) to make sure the complete system can operate in an automated fashion.
These Meta Application Programming Interface (APIs) allow PSPs to validate accounts
during customer on boarding, validate addresses for sending and collecting money,
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provide phishing protection using white listing Application Programming Interface
(APIs), etc. Figure 2 shows the high-level architecture of UPI.

Some of the key Application Programming Interface (APIs) to enable UPI transactions
are:

1) Payment API: This is the primary Application Programming Interface (APIs) used for
routing the transaction and is used to initiate Pay Request (Push Payment) and Collect
Request (Pull Payment). The API contains remitter and beneficiary details.
2) Authorization & Address Translation APIs are used to obtain appropriate
authorization details and translate the specific Virtual Payment Address to the
common global addresses (Bank Account Number and IFSC Code, Aadhaar number).
This allows users to simply provide such virtual (tokenized) address to others
(individuals, entities, etc.) without having to reveal actual account details.
3) Keys List APIs: These APIs enable secure capture and communication of credentials
to authenticate transactions by various entities in the UPI ecosystem. These APIs are
used to request for and cache the account providers and other entities list of public
keys. Trusted and certified NPCI libraries and utilities are used for credential capture
and PKI public key encryption at capture time.

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 Figure 2. UPI Gateway Architecture, Source (1)

Application Programming Interfaces (APIs) are used to translate specific Virtual Payment
Addresses to widely used global addresses and receive the necessary permission
information (Bank Account Number and IFSC Code, Aadhaar number). Without having
to provide their actual account information, users can simply give others access to this
virtual (tokenized) address.

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1) Keys List Application Programming Interface (API): This API allows various entities
in the UPI ecosystem to securely capture and communicate credentials to authenticate
transactions. These Application Programming Interfaces (APIs) are used to request and
store the list of public keys from account providers and other entities. At credential capture
time, PKI public key encryption is performed using trusted and approved NPCI libraries
and utilities.

Transactions in UPI Payments

As we already know UPI allows a set of Non-Financial and Financial Transactions.

Financial transactions include two types of transactions:

1) Pay Request (Push Payment): The user starts this transaction, which
pushes money into the beneficiary's bank account. The beneficiary's virtual
payment address, Aadhaar number, account number, and IFSC code can all be
used to make this Push Payment.
2) Collect Request (Pull Payment): The beneficiary starts a Collect Request
transaction to request money from the payer using a virtual address. The user
can optionally specify a time limit for when the Collect Request will expire.
On his PSP UPI App, the payer will receive the collect request, which must
be authenticated with a 4- to 6-digit MPIN in order to complete the transaction.

UPI Transacting Parties

There can be a maximum of four transacting parties in the UPI system. These four parties
are made up of two PSPs, one for the sender and one for the recipient, which provide the
UPI interface through PSP UPI mobile apps, and two banks, one for each party. The two
PSPs enable the transaction by allowing the debit from the remitter's bank account and the
credit to the beneficiary's bank account.

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Authorization for Transaction

All digital transactions in India must use two factor authentication. UPI eliminates the
requirement for an external device by approving and authenticating transactions right on
the user's personal mobile phone. The first element is the hardbound mobile device
fingerprint, which the PSP UPI App verifies. The second authentication factor for the
transaction is a four- to six-digit MPIN that the user produces and enters into the NPCI
library included in the PSP UPI App. All common mobile operating systems, such as
Windows, iOS, and Android, can use these libraries. These libraries make it possible to
securely capture MPINs and passwords. The secured credentials are gathered by the NPCI
libraries, which implement PKI encryption. These passwords are encrypted credentials.
(MPIN) are sent to the issuer bank for authentication; if authentication is successful, the
transaction is completed.

Transfer of UPI Payments Transactions

Consumer Registration

a) On a mobile device with a mobile number registered with their bank,

users can download any PSP UPI application from app discovery platforms
like Google Play or the Apple App Store.
b) To verify the validity of the mobile number registered with the user's
bank and to enable hard binding of the mobile device with the mobile
number, the PSP UPI application will automatically send an encrypted
outbound SMS from the user's mobile phone. The device's rigid binding
serves as its unique fingerprint.
c) Users can now construct unique Virtual Payment Addresses, such as
abc@xyzbank, which will serve as their own payment IDs.

2)Bank Account Registration

a) On the PSP UPI App, users can register their bank accounts. The Issuing
Bank verifies the validity of the mobile number registered with the bank and

22
 gives the customer with a list of all bank accounts linked to the mobile number
via the PSP UPI App.
b) The PSP keeps the account information that the Issuer Bank sends in its
database. At present time, the PSP Database includes data like Registered
Mobile name of user on PSP UPI App, Virtual Payment Address, Bank Name,
Account Number and IFSC Code.
c) In order to authenticate the transactions, the user must now create a Mobile
Personal Identification Number (MPIN). The PSP UPI App sends an OTP
Request to NPCI for the recently added account. The Issuer Bank responds to
NPCI's request for an OTP by sending the OTP by SMS to the user's registered
mobile number.
d) The user is required to enter the last six digits of their debit card number,
the expiration date, and the OTP they received on their registered cellphone
number in order to verify their identity. The user enters the desired MPIN on
the NPCI library contained in the PSP UPI app in order to construct the MPIM.
The Issuer Bank verifies the Card information and OTP, and the UPI PSP
application sends this MPIN to NPCI, which then delivers it to the Issuer Bank
by encrypting it with the public key obtained through PKI. With the use of its
private key, the issuer bank decrypts the encrypted MPIN and verifies the
MPIN's configuration.
3)Transaction Flow

a) The beneficiary's account number, IFSC code, or Aadhar number must be

entered in order to submit a Push Payment (Pay Request) to the beneficiary.

b) On the NPCI Libraries embedded in the PSP UPI App, the user inputs the
MPIN. With the use of the NPCI private key, MPIN is decrypted before being
delivered to UPI. Once more, the Issuer Bank receives the MPIN encrypted
by NPCI using its public key, which it subsequently decrypts with its own
private key. Following MPIN verification, Issuer Bank debits the Remitter's
bank account and credits the Bank account of the beneficiary.
c) To send a Push Payment (Pay Request) to the recipient, the beneficiary's
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account number, IFSC code, or Aadhar number must be entered.
d) The user enters the MPIN on the NPCI Libraries included in the PSP UPI
App. Before being sent to UPI, MPIN is decrypted using the NPCI private
key. The MPIN is once more delivered to the Issuer Bank encrypted by NPCI
using its public key, which it then decrypts using its own private key.

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 SECURITY IN UPI

To complete any digital transaction in India, two factor authentication must be enabled.
Two-factor authentication calls for the use of a password or other set of credentials that is
known only to the user as the second component once a person's true identity has been
verified. UPI utilises a one-click, two-factor authentication mechanism that enables users
to confirm both authentication factors with a single click. The mobile device fingerprint
is used as the first authentication element and to confirm the user's real identity. When
creating a user profile on the PSP UPI App, binding the mobile number to the device is
the most important security measure. This is accomplished by having the user's bank-
registered cellphone number send an encrypted outbound message. By tying the mobile
number to the Device ID, IMEI ID, SIM number, and PSP App ID, this message creates
a device fingerprint for the mobile phone. If the mobile fingerprint changes—that is, if the
mobile number, Device ID, IMEI ID, SIM number, or PSP App ID—the user must re-
authenticate the mobile device. The user-created, four to six-digit MPIN is the second
factor of authentication and is used to confirm the transaction.

Data has been categorised into various sorts of information for data security:

1) Sensitive data: This type of information should not be kept on hand and should only be
transferred in encrypted form. Passwords, PINs, and other sensitive data, etc.

2) Personal information, such as a bank account number. The PSP can save private
information, but only in encrypted form.

Non-sensitive data can be stored in an unencrypted form, including Name, transaction

history information (such as amount, timestamp, response code, and location).

In the current UPI architecture security is handled in following ways:

1) Identity and Account Validation: The PSP UPI App automatically sends an outbound
SMS during the User Registration process to verify the validity of the registrant's personal
identity and bank account. The issuer bank then verifies the mobile number to make sure
it is the registered mobile number of the user holding a legitimate bank account with the
bank. This outgoing SMS is delivered in encrypted form from Mobile number. Through
this automatic outbound encrypted SMS that firmly associates the Mobile number with

25
the device, the PSP UPI App makes device fingerprinting possible. By doing this, it is
ensured that the transactions coming from the hardbound device are safe right away.
2) Application security: Each PSP UPI app has received RBI-Certification and PCI-DSS
certification. Sensitive information like MPINs and One Time Passwords (OTPs) can only
be entered on the embedded NPCI Utilities and Libraries included in the PSP UPI app.
The common library base 64 encodes the encrypted credentials before returning them to
the PSP programme for further UPI transmissions.
3) Transaction Level Security: The PSP UPI App and the Issuing Bank share responsibility

for transaction authorization and authentication. The device fingerprint, which is the initial
authentication element, is verified by the PSP UPI app. Users must enter a 4- to 6-digit
MPIN, which is verified by the issuing bank, to authenticate each transaction. Only when
the MPIN and device fingerprint are verified can any transaction be completed. The user
has complete control over stopping any unwanted and harmful payment requests. To
authenticate the transaction and begin any debit from his bank account, the user must
manually enter the MPIN.
4) MPIN Security: The NPCI library, or NPCI interface integrated in the PSP UPI App,
is the only place where the MPIN may be obtained. When entering the MPIN for an
interoperable transaction, this interface is called. Through a secure channel, NPCI sends
the Issuer Bank the MPIN. The MPIN is encrypted by UPI using the public key of the
Public Key Infrastructure (PKI) encryption scheme, and it is decoded by the issuing bank
using its private key.

All Application Programming Interfaces (APIs) must communicate through HTTPS in

order to guarantee message security, trust, and non-reputability. Every message is digitally
signed, has a distinct message id for each request and response, and a distinct transaction
id. The verified payee's name must always be displayed to the payer in any payment
request in order to prevent phishing, according to the Payer's UPI PSP application.

Since UPI analyses all device fingerprints (for example, IMEI Number, SIM Number, etc.)
and is securely coupled to your mobile hardware, it is far safer than any Card or e-Wallet
transaction. It is also technically difficult to replicate the payment environment. The
largest security risk for cards and e-Wallets is the absence of a password as a second

26
element of authentication during a transaction. Since transactions may be automatically
produced by a hacker without the requirement for a password, this renders the cards and
wallets vulnerable to system level breaches. In theory, a hacker can therefore make
thousands of fraudulent transactions at once.

Effects of UPI on PAYMENTS INDUSTRY

Since its introduction in August 2016, UPI has experienced tremendous development in
terms of user count, transaction volume, and transaction value. More than 60 PSP UPI
apps are currently accessible on app discovery portals, and 55 banks are live on the UPI
platform. More than 20 million consumers have downloaded various UPI PSP apps in the
first year of UPI's debut. Since UPI's debut, the overall value of transactions has increased
82% month over month, reaching Rs. 227 billion as of August 2017. (Figure 3). The
monthly value of UPI transactions has already surpassed the combined monthly value of
all Indian e-wallets. Currently, UPI transactions are less expensive than credit and debit
card transactions, which total roughly Rs. 2700 billion each month, but UPI is expanding
much more quickly.

The majority of UPI transactions today include money transfers between individuals;
nevertheless, transfers between individuals and businesses are still relatively uncommon.
This is because UPI payment infrastructure is not present at merchant payment terminals.
UPI use for merchant payments is expected to increase as more businesses start accepting
UPI payments from their customers. In order to accept UPI payments, existing POS
devices that now accept payments made with debit and credit cards must be upgraded and
modified.

27
Figure 3. UPI growth over the years, source: NCPI

The customer will use UPI PSP Apps to pay after scanning the QR code. Additionally,
POS devices must to have access to the confirmation status of UPI transactions. With UPI
as a payment method, debit cards could become obsolete because you wouldn't need to
carry one around since your phone would act as your debit card. However, UPI as a
product does not compete with credit cards because it does not currently support credit
cards. UPI definitely provides a superior user experience for online payments than debit
cards or net banking.

28
Effects on Payments in Physical World:
In the real world, payments are made with cash and with debit or credit cards. UPI offers
a more affordable alternative to card and cash transactions, which has the potential to
revolutionise offline payments. With UPI, retailers may accept digital payments made
with cards without the need for pricey POS equipment. Instead, they can display a special
UPI QR Code that customers can scan with their smartphones to pay, with the money
being credited to the retailer's bank account immediately. A merchant's mobile phone can
be used to get payment confirmation. Due to the lack of digital acceptance capabilities
among retailers, cash transactions dominate at the merchant point. Customers can now
pay a business directly using their UPI ID, and the business will get a confirmation of the
payment on their phone.

Effects on Online Payments:

Payment gateways currently facilitate the majority of online transactions, with debit/credit
cards and net banking serving as the two main payment methods. Users are needed to enter
all of the private information, such as card numbers, card verification values, usernames
and passwords for online banking, etc. Digital payments are thus susceptible to fraud and
data breaches. Additionally, there are numerous network hops required between card
networks, issuers, and acquiring banks in order to enable a transaction, which increases
the likelihood that it may fail. Customers that use UPI do not need to supply any
information; all they need to do is use a smartphone to scan a QR code shown on the
website, and the payment will be processed quickly across a few networks. By doing this,
sensitive data leaks can be prevented, and transaction success rates can rise.

In addition to being the most efficient, quick, and seamless mode of payment, UPI enables
digital payments for a wide range of enterprises, including both offline and online retailers.
Since there is no need for a POS machine in physical businesses, each employee can be
equipped to accept digital payments. Employees can be given a unique UPI ID and QR
Code that they can show to customers to obtain payment. UPI offers businesses
exceptional opportunity to collect payments where customers are not physically present,
such as in lieu of proximal payments where customers are physically present at the billing

29
counters. Payment requests can be sent to the client and the customer can make a remote
payment using a mobile phone for things like utility bills, insurance premium collecting,
and school fees. The ability to accept payments at the moment of delivery is another
significant use case for enterprises. Cash on delivery is quite common in India, accounting
for about 60% of all e-commerce transactions. Cash is paid at the time of delivery. The
customer can simply pay using UPI at the time of delivery if the payment at the time of
delivery is turned into a digital payment at the time of delivery using UPI.

30
 The Way Forward—UPI 2.0

Due to the expanding ecosystem supported by banks and other payment service providers
as well as growing consumer adoption, UPI has experienced significant growth. UPI must
prioritise security, usability, and the development of business solutions if it is to become
the preferred payment system for both consumers and companies. In this vein, NPCI is
releasing UPI 2.0, an updated version of UPI with improvements to security and customer
usability as well as new business use cases and an expanded UPI ecosystem.

Transaction authentication using Biometrics: Users can currently utilise a 4- to 6-digit

MPIN to authenticate their payments. On the PSP UPI App, the user can generate this
MPIN on their own and alter it as and when necessary. Secure NPCI libraries record this
MPIN, which the Issuer Bank then verifies. Users submitting incorrect MPINs or
forgetting their MPINs can result in failed transactions when using this method of MPIN.
Fear of fraudulent transactions in the event that a mobile phone is lost or stolen is another
risk that people feel. UPI 2.0 will integrate transaction authentication utilising a user's
biometrics, such as their fingerprints or iris prints, to address these problems.

The user will have the choice to use their biometrics to verify the transactions. The Unique
Identification Authority of India (UIDAI), which offers online authentication services
including biometrics and OTP authentication, has been connected with UPI to enable
biometric authentication. Over 1.16 billion, or nearly 87% of Indians, have registered for
the national unique identity service through Aadhaar, and UIDAI is the central repository
for their biometric data. Additionally, the user's bank account is now legally linked to their
Aadhaar number. Manufacturers of mobile phones are developing devices that can read
users' iris and fingerprint prints. To be able to record the user's biometrics, such devices
will need to be accredited by and registered with UIDAI. When a user chooses to use
biometrics to verify the transaction, their fingerprint or iris print is recorded on their
mobile device and transmitted to NPCI in encrypted form. NPCI then uses the UIDAI
authentication API on behalf of the Issuer Bank to verify the biometrics.

UPI Payment Mandate: Making regular recurring payments for things like utility bills,
school fees, insurance premiums, and loan EMIs is one of the most common uses for UPI

31
among consumers and businesses. To make it possible for companies to easily accept
recurring payments,

Customers will be able to give one-time authentication for recurring payments to multiple
merchants and billers using features in UPI 2.0. Even though creating the mandate only
needs to be done once, it enables the user's account to be debited in accordance with the
accepted terms and conditions without the user having to confirm the transaction each
time. Through the mandate service that UPI will provide, both the sender and the
beneficiary will be able to set up mandates or standing orders through their respective
banks. Immediately following the remitter's one-time authentication, this mandate must
be registered. Beginning with UPI 2.0, only revocable mandates are anticipated to be
supported, and only virtual payment addresses can be used to create mandates.

DIGITAL PAYMENT MODES IN INDIA

The development of digital payments and the shift from a cash-based economy to one with
less cash transactions are being facilitated by a number of factors. These enablers include
the increasing use of internet access on mobile devices, one-touch payments, the growth
of the financial technology industry, and government initiatives such as tax breaks and
incentive programmes. In India today, there is a favourable environment for the expansion
of digital payments. India currently offers a number of digital payment methods. These
include:
3. Prepaid credit cards
4. Debit / RuPay cards
5. UPI: Unified Payment Interface
6. NEFT: National Electronic Funds Transfer (NEFT)
7. RTGS: Real Time Gross Settlement.
8. Wallets like paytm/mobikwik/phonePe etc.

32
33
 Significance of the Study
One of the most recent developments offered by India's national payment organisation is
the unified payment interface. The payment method has seen a significant change since
the introduction of UPI. It is crucial to understand the advantages and disadvantages of
UPI services as well as how customers feel about new innovations made by the national
payment corporation. The goal of this study is to ascertain client preferences for unified
payment interfaces and how these interfaces impact customer satisfaction.

Need for the Study

An abstraction of an IMPS-like standard money transfer method is UPI. Along with
making consumers' lives easier, it helps to conceal important account information. UPI is
also quick and inexpensive compared to using a debit card or net banking. The study will
attempt to comprehend, discuss, and highlight the topic pertinent to the title by using
statistics from the government and other organisations.

Objective

1. To determine which digital payment method and application the public prefers.
2. To learn about the issues that come up when utilising UPI.
3. To provide strategies for luring more customers.
4. To learn how frequently each age group and income level makes digital payments.

34
 LITERATURE REVIEW

2.1 INTRODUCTION

The purpose of this study is to determine customer preferences for unified payment
interfaces and to determine how customer satisfaction is affected by these interfaces. The
following review of the literature is regarded by the researchers to be pertinent for this
study.

•Babita Singla, Manish Bansal (2015) In this study, the researcher seeks to understand
how customers feel about unified payment interfaces and to identify their preferences in
this regard. The following literature review was discovered by the researchers to be
pertinent for this investigation.

 Khurram Shafiq and Khalil Ahmad (2015) Does the use of plastic money
affect consumer purchasing behaviour? The results of this study are conclusive
because consumers feel comfortable using plastic money because it is
convenient, there are no hazards associated with carrying cash, and it is used for
rewards buying.

 Rouibah (2015) Demonstrated that the main barriers to payments were

poor security, a lack of trust, a fear of failure, expensive fees, and a lack
of familiarity. Additionally, the availability of banking services, privacy
protections, and high-quality services all had an impact on the acceptance
of e-payments.
 Rathore (2016) claimed that using a wallet to make digital payments
made it very easy for customers to make online purchases without having
to travel far.

35
• Dr. Stitch, Shewta Rathore (2016)

Her research on "Appropriation of Cashless transactions By Consumers" informs us that

electronic wallets are quickly becoming a common way to make payments online.
Customers are adopting advanced wallets at an almost unbelievable rate, largely due to
comfort and ease.

• Roopali Batra, Neha Kalra (2016)

In a time of digitization, the study aims to take into account client recognition, usage
design inclinations, and fulfilment level with regard to advanced wallets based on an
inquiry of 52 respondents. This study is titled "Are Digital Wallets The New Currency?"
It also acknowledges the obstacles and challenges associated with choosing the same. The
findings show that there is a sizable untapped market for electronic wallets in terms of
both increasing mindfulness and also its use.

• K. C. Balaji and K. Balaji (2016)

According to "A Study on Demonetization and Its Impact on Cashless Transactions," the
framework for cashless exchange is growing to new heights. People frequently switch to
cashless transactions. It is accurate to say that the cashless system is both a necessity and
a requirement for the general people.

• Kunal Taheam, Rahul Sharma and Saurabh Goswami (2016)

The study's findings, titled "Drivers of Digital Wallet Usage: Implications for
Leveraging Digital Marketing," centred on a number of elements that
influenced people's decision to utilise electronic wallets for payment
processing. People in Punjab have been recognised employing advanced
wallets due to the intentions of controllability and security, societal influence
and usefulness, and the necessity for execution development.

36
• Singh (2017)

indicated that there was a big disparity between consumer education and digital payment
uptake. Consumers' attitudes toward digital payments had a favourable and significant
impact on whether they adopted them..

Somanjoli Mohapatra (2017)

They found that all NPCI systems had a common interface, which not only improved
interoperability but also the customer experience. Money transfers should be simple,
rapid, and hassle-free with the UPI. The widespread use of smart phones, the accessibility
of an online verifiable identity, the advent of biometric sensors in phones, and the
widespread availability of financial services will actively push electronic payment systems
for the establishment of a less-cash society in India.

• Radhika Basavaraj Kakade, Prof. Nupur A. Veshne (2017)

According to their study, the UPI has made digital transactions for individuals as simple
as texting. Service is available around-the-clock, unlike RTGS and NEFT, which are
unavailable on holidays or outside of normal business hours. This will greatly increase
system efficiency and aid India's transition to a fully cashless society.

• Roshna Thomas, Dr. Abhijeet Chatterjee (2017)

Although it is challenging to ignore the difficulties, the study found that UPI is a tool with
appropriate qualities that may make financial transactions for clients simple and
affordable. A robust Aadhar platform (UID) along with national statistics on increased
financial inclusion, smartphone adoption, and telecom subscriptions point to promising
futures for UPI, but competition from mobile wallets and potential instances of banks
failing to resolve technical issues, particularly those relating to the front-end platform
created by them, may have a negative impact on the reach of this cutting-edge payment
tool.

37
 RESEARCH METHODOLOGY

3.1Research Design

A structured questionnaire made in the form of Google Forms with a list of questions
served as the primary data collection tool. To acquire all pertinent data, a questionnaire
connected to the research project was distributed online to friends, relatives, acquittances
and other associates. Respondents sample size consisted of mostly working professionals
and business people from Delhi-NCR region. The form was circulated to around 400 to
500 contacts and we received the responses from 161 of them. From secondary data
gathered utilising prior research studies on related themes and other websites, several
insightful conclusions were formed.

The survey consists of closed ended questions and collected only quantitative data, it is
more focused upon the prevalence of the use and awareness of various UPI services. We
focused more upon how people are adopting the technology in their lives, what benefits
they have from using UPI, what kind of platforms and services are mostly used, issues and
other factors affecting the rise of UPI payment in marketplaces and trades.
As considered appropriate, the questionnaire was separated into various sections. The first
section deals with individual attributes, which are considered independent on the grounds
that there are demonstrable changes between levels in terms of how dependent variables
are perceived.

38
 DATA DESCRIPTION AND ANALYSIS

As we can see most of our respondents are earning, this is majorly because to use UPI or
and its Mobile Applications it is mandatory to have a bank account and possession of the
mobile phone with the number linked to that particular account, as we can see the number
of students UPI is comparatively small than business owners and salaried employees.

2) Age group of respondents.

As we can see 72.6% of the respondents are young and under 30 and 88.9% are under 40,
this is because of their ability to adopt the change in technology as young people are more
flexible and aware with new technologies.
39
According to the above results, we can easily deduce that the popularity, awareness and
prevalence of UPI has increased significantly from its beginning years.

4)

Advertisements and friends and relatives became the major tools for UPI propagation, a
common reason of knowing from friends and relatives is that UPI involves two parties the
payee and the payer, in some cases the first time download or use of UPI happens when
40
anyone of the two parties insists or sending money from UPI and hence the other party
uses or get to know about it the first time.

5)

We have observed that most of the respondents are aware about the 4 major UPI apps and
PayTM and Google pay are the most preferred followed by BHIM and PhonePay, the
major reason could be presence of Paytm in wallet form soon before inception of UPI and
for Google pay their strategy of giving cashback scratch coupons in the starting days
proved to be beneficial for their popularity.

41
6)

Major Utility of UPI proved to be in paying bills and recharges, in future days we can see
it as a major payment method for online bookings and payments as well.

7)

UPI has proved to be the most convenient and easy mode of payment lately; this became
a major reason for its increased use in recent years.
8)

UPI was introduced in 2016, just before demonetisation, but its use by most of the mature
and elderly people increased rapidly after 2020 covid-19 pandemic.

9)

People are still paying out in cash usually at shops, their second most preferred payment
method are wallet which in turn themselves are using UPI for payment transfer, people
are also paying with Phone numbers and UPI IDs on shops making it almost equivalently
preferable to cash.
10)

Major UPI app like PayTM and PhonePay have a wallet option in their apps, in that case
the money is transferred from customers bank account to customers wallet account
associated with his app, the apps usually earn through this method as then they have
money in their systems, which they use for lending and loaning.

44
11)

In most of the cases the respondents are getting interest for keeping their money in wallet,
this was coming into play after RBI decided that all the digital wallets should comply as
banks. KYC for digital wallets also started after it.

12)

It is very clear that most of our respondents are making payments through UPI very often
and every other day, this concluded how UPI is making people go cashless in their day-
to-day life.
46
48
 SUMMARY & CONCLUSION

Findings:
1) If you transmit money via the UPI programme, the recipient must sign up for the UPI
application at the opposite end. Otherwise, you won't be able to send money by cell
phone number; instead, you'll need to input your account number and IFCS code to
send money. Till now UPI supports only for Android users so other users should wait
for NPCI for developing software for other platforms.
2) Because UPI is still in its early stages, there are more common concerns like server
outages, and there is no dedicated customer service line in the event that a payment
is declined but money is not refunded.
3) 3) UPI primarily targets smartphone users, and although the number of smartphones
is rising daily, there is not enough digital literacy in the population. It will have an
impact on UPI.
4) There are now no transaction fees, but banks may begin charging for the upkeep
of servers and other infrastructure facilities.

5) Access to several bank accounts via a single application.

6) Virtual ID use is more secure because there is no credential sharing.

7) One-button authentication

8) Directly file a complaint with a mobile app.

9) Easy customer fund collection using unique identities

10) No risk of storing the virtual address of a consumer, unlike with cards.

11) Squeeze the clients who do not have suitable debit or credit cards for mobile

and online purchases.

12) Fixed the issue with big denomination money notes and COD transactions.

13) Although Internet access is a need for UPI, not all locations in India have

data connections.

50
 CONCLUSION

By permitting the use of mobile phones as the primary method of sending and
receiving payments, UPI developed the m-payment technology. Comparing UPI
to all other payment systems, it is possible to say that it is the most advanced.
Mobile phone-based money transfers between any two bank accounts are possible
thanks to the UPI payment system. Customers can use it to pay multiple retailers
directly from their bank accounts, both online and offline, without having to enter
their net banking or wallet passwords, credit card details, or IFSC codes. With a
single interface, it aims to simplify processes and make money transfers quick,
easy, and hassle-free. These UPI characteristics encourage respondents from the
service industry to utilise the tool, and the study mentioned above demonstrated
a substantial difference between the adoption of UPI by men and women. Smart
phone use, the availability of an online verifiable identity, widespread banking
access, and the integration of biometric sensors into phones will actively promote
UPI Transactions, and research findings indicated that the respondent has a
favourable attitude toward the UPI transaction for ushering in a society in India
with less cash.
Despite all government assertions to the contrary, cash and credit cards continue to be the
most popular forms of payment. Although the number of people using digital payments
has multiplied across all age groups, more awareness needs to be generated, particularly
in the area of UPI. The age categories of 20 to 35 and above 40 have the highest and lowest
frequency of digital payments, respectively. Although people are aware of UPI, they do
not have the same interest in it as they do in mobile wallets and debit/credit cards. There
are issues with the new technology that must be resolved if it is to be promoted in the
future. The front-end platform for UPI must be created by the banks. . Consumer
acceptance of UPI will certainly be challenging if banks do not work successfully on this,
as private mobile firms have really engaged in developing merchant networks to enable
smooth and error-free payment processes. Additionally, they have included cash backs
and incentives to entice users, if only for a trial use.
Comparing the customer bases of all currently available bank-supported apps, Indian
mobile wallet businesses already have a greater customer base. Banks will lose money to
private fintech companies if UPI is unable to fulfil its promise of developing a one-stop
solution for financial payments. With a distinct UPI identity that syncs to Aadhar's
verification, links to the merchant for the settlement, and enables the issuing bank to finish
the transaction, the UPI enables customers to trade directly through their bank accounts.
Without the use of intermediaries (like Visa and Master Card Switch) to enable the
transaction, the transaction is completed in a single swipe. . This was also made feasible
by the fact that India is the only nation to have been able to register more than a billion of
its citizens on the Aadhar identification database (DNA, 2016). A strong Aadhar platform
is thus one of India's outstanding accomplishments and will help the nation digitalize its
payment services through UPI.
• According to the study above, UPI will undoubtedly revolutionise how we transact now
and shift to digital payments, where every person's smartphone will serve as the primary device
for all payments.
• UPI is now in its infancy. When it is fully operational, or when all banks sign up for it, the
banking industry and customers will both benefit greatly in terms of sending and receiving
money.
• We are aware of the significant increases in smart phone usage and internet access
in rural areas in recent years. This creates a significant opportunity for Indian consumers
to adopt UPI.
• With great security and an easy process, UPI makes it convenient to transact without
knowing bank data, which only requires knowing a phone number or virtual address. All
of the aforementioned information leads us to the conclusion that UPI will eventually
phase out cash payments and reduce the use of currency notes. This would result in a
system that is transparent and an economy that uses less currency. Currently, India is
developing at a rate of 6 to 7%. We are aware that the difficulty of moving hard currency
around the country will be lessened or eliminated via cashless payment.

52
 RECOMMENDATIONS

The fact that money sent or received through UPI goes directly into a bank
account is a major bonus. Payments and cashbacks remain in the wallet when
using digital wallets like Paytm. Additionally, companies frequently charge a
fee to transfer the funds to a bank account. Prospective clients need to be
appropriately informed of this fact. As more individuals become aware of this,
there will be a greater shift in favour of UPI payments.
Targeting UPI uptake and widespread use for merchant payments is necessary.
According to data from YES BANK's chief digital officer, there are around 45
million merchants in our country who do not accept electronic payments. They
must be pursued. Similar market targeting should be done for UPI to make it
a game changer. UPI is a success when even small retailers, tea vendors, and
Kirana (neighbourhood) shopkeepers started accepting them.

3. According to NPCI data and research insights, the individual-to-merchant

payment area has the potential to produce larger volumes. This might be for
paying rent, paying bills, putting money into mutual funds or chit funds, etc.
4. UPI's initial usage growth was mostly fuelled by demand that emerged
after demonetisation, but to maintain this growth, the industry will need to
develop a variety of use cases for UPI payments, much like how digital wallets
have benefited from including a variety of use-cases.
Limitations of Study:
1) The study does not contain in depth analysis of any economic or social impact of UPI
on society or consumer behaviour.
2) The study does not give insights about how PSPs used their marketing strategies to
propagate and normalize UPIs.
3) The data collected is quantitative and gives us perspective but not deep insights.
 BIBLIOGRAPHY & REFERENCES

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11. www.trai.gov.in

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