India's digital payment landscape has witnessed a meteoric rise, and at the heart of this revolution lies the Unified Payments Interface (UPI). 2023, in particular, was a landmark year for UPI in more ways than one. UPI transactions crossed the 100 billion mark in 2023, closing the year at 118 billion. This was a 60% growth as compared to 2022. The value of transactions also grew by 44% in 2023.
There were several new UPI features that were brought to consumers in 2023; a marquee one being UPI Tap & Pay. Introduced in September 2023 at a leading fintech festival, UPI Tap & Pay is a contactless payment method that is poised to transform the way we transact. This feature will take UPI a leap forward by making payments faster, smoother and even more secure.
How does UPI Tap & Pay work?
No more QR codes to scan. If you have an NFC-enabled smartphone and the merchant has a compatible point-of-sale (POS) terminal, then all you need to do is tap your phone on the terminal and your payment goes through instantly through your UPI-linked bank account.
Some of you may already be using Tap & Pay with your credit cards. UPI Tap & Pay will work in a similar manner.
More than just convenience
Sure, UPI Tap & Pay will make digital payments more convenient. We won’t need to fumble with our phones anymore to open an app and scan a QR code. We have to simply tap our smartphone!
This is not only more convenient, but with set limits, also more secure. Currently, UPI Tap & Pay will work for transactions of ₹500 or less at offline stores. For this, the feature leverages UPI Lite, a PIN-less, offline payment mechanism. Beyond ₹500, the familiar UPI PIN provides an extra layer of protection.
What also enhances the security of UPI Tap & Pay is that it utilizes NFC technology, which minimizes the risk of fraudulent transactions. QR codes can be easily manipulated, but NFC technology makes transactions secure.
What is NFC technology
Near Field Communication (NFC) technology is akin to a handshake between two devices. It is a short-range wireless technology that enables two devices to communicate with each other when they’re touched together or brought within a few centimeters of each other.
Apart from contactless payments, NFC is also used for sharing photos, videos or files, connecting devices via Bluetooth using a tap, using a phone as a key, etc. What makes NFC secure is that, unlike unknown QR codes, it uses your very own device to complete a transaction.
UPI Tap & Pay benefits to merchants
Merchants, long burdened with managing cash and handling QR codes, can now enjoy simplified payment acceptance. UPI Tap & Pay requires minimal infrastructure, eliminating the need for QR code scanners and printers. The speed and efficiency of UPI Tap & Pay translates to quicker checkout times, leading to happier customers and improved business productivity.
Furthermore, UPI Tap & Pay empowers businesses by offering a low-cost, hassle-free solution, enabling them to accept digital payments and attract a wider customer base. This financial inclusion aspect aligns perfectly with the vision of a digital India.
The future is in UPI Tap & Pay
Looking ahead, UPI Tap & Pay is expected to evolve, enabling peer-to-peer payments, bill payments, and more. With increasing smartphone penetration and NFC adoption, UPI Tap & Pay is poised to become the de facto payment method in India.
However, UPI Tap & Pay will face some challenges. Ensuring widespread adoption across merchants and user awareness are crucial. Additionally, concerns around data security and potential misuse of NFC technology need to be addressed with robust security protocols and user education.
In conclusion, UPI Tap & Pay represents a significant leap forward in India's digital payment journey. Its focus on convenience, security, and inclusivity holds immense promise for revolutionizing the way we transact. While challenges exist, the potential of UPI Tap & Pay to transform the financial landscape and empower millions is undeniable.
FSS and UPI
FSS UPI solutions for real-time payments equips PSPs with a flexible platform to streamline real-time money movement via the UPI network and offers the extensibility to cater to a variety of use cases – P2P, P2M, P2C and C2P.
The solution’s gateway connects with the central infrastructure to enable instant push/pull payments based on a virtual address, completing real-time authorizations as well as immediate payment clearing and settlement efficiently.
