The National Payments Corporation of India, a government-run umbrella organization for payments and settlement systems, announced the launch of UPI Autopay to enable recurring retail payments.
Praveena Rai, chief operating officer at NPCI in Mumbai, says Autopay introduces recurring payments under the United Payments Interface, a real-time payment system for interbank transactions via mobile devices, without requiring inputting bank account details.
“UPI started with person-to-person retail transactions, and then added person-to-merchant,” she said at the Global Fintech Fest, a virtual conference held on July 22 co-organized by NPCI. “Now we’re adding a repeat mandate.”
This allows people to set regular installments that flow directly from their bank account to the payee, via the UPI app or apps from participating banks or other players. This can cover needs from a bus pass to paying for digital media streaming services, or from paying down insurance premiums to making micro investments.
Banks jump in
Rai says she’s in talks with banks about what applications they can launch using UPI Autopay. Banks have in fact been asking for this feature since 2018, when UPI’s architecture was upgraded, but NPIC and the Reserve Bank of India (the central bank) demurred over security concerns. This has led banks to create digital services on their own, but UPI will enable all banks, wallets and fintechs to use a common infrastructure.
Banks followed up the Autopay announcement by declaring their first products using it.
HDFC is partnering with PolicyBazaar to allow users of the comparison site’s app to make monthly insurance premiums on products sold by the bank, says Parag Rao, HDFC’s head of payments, digital banking and consumer finance. The feature will apply to both life and non-life products. “Customers who had to pay with a lump sum can now make monthly payments, which will expand the market,” he said, adding that HDFC is talking with utility companies, telcos and others about further uses.
ICICI Bank is also launching an Autopay feature, this one for subscriptions to digital media streaming services. “Our use case is entertainment,” said Bijith Bhaskar, head of digital banking at ICICI Bank.
UPI was launched in 2016 and has become the backbone of “the India Stack”, which includes identity databases (Aadhaar), instant retail payments (UPI), payments for remittances and contactless payments for transportation, billing services, and APIs to tie everything together.
According to PwC, in 2020 UPI will have processed 12.5 trillion transactions valued at Rs21 trillion ($281 billion). And it’s growing at a staggering rate: PwC estimates from 2017 to 2020, the compound annual growth rate of this product is 785% in volume and 570% in value.
But acceptance by merchants remains low, says Dilip Asbe, CEO at NPCI. This is in part because there still remain costs to acquirers to service merchants, from point-of-sale machines to managing risk and fraud. He wants to see rapid uptake, and Autopay is one means. It will make payments more convenient, give consumers a sense of control over their spending, and by driving up volumes should help reduce acquirer costs.