Indian society has gone through various tides of changing economic structures - from an era where there was a fair level of equality between classes to a time when the lower classes faced increased hurdles on participation in the formal economy. Today, the economic divide in India is quite perceivable.

For instance, the Oxfam survey reveals that the wealthiest 1% of the population controls 50% of the wealth of the county, whereas only 1% of the wealth is in the hands of the bottom 50%. An economic divide like this is seen in only one other country in the world, South Africa.

To further display the disparity in societal classes, India makes the list of the top 5 countries for both the maximum number of billionaires as well as the maximum number of people living in poverty.

Given the above pieces of information, introducing the populace of India to new and innovative payments infrastructures is touted to be a game-changer that boosts participation of all economic classes in the country.

Thanks to the participation of the Indian government in driving new payments platforms forward and the bright talent that brings these initiatives to fruition, the landscape seems to be shifting towards a technically advanced infrastructure that is conducive to narrowing financial barriers on the poor and making digital payment technology more inclusive.

The current landscape of India's payment structure

Over the last few years, mobile payment infrastructure has undergone massive improvements concerning availability and prominence over non-digital forms of currency.

This can be attributed mainly to the fact that smartphones are becoming ubiquitous in the Indian market and businesses are offering options of digital payment more readily as consumers move towards electronic transactions. The ease of holding assets in mobile wallets adds tremendous convenience over cash transactions which could require frequent trips to ATMs.

What is UPI payment?

As India doubles down on its ambitions of embracing the cashless revolution, we see the advent of new technology - the Unified Payment Interface - that allows individuals to utilize their smartphones as virtual debit cards to carry out instant transactions.  UPI was launched in 2016 and can be thought of as an identity card for financial transactions.

Using IMPS (Immediate Payments Service), UPI allows you to send and receive money using unique identifiers called Virtual Payment Addresses (VPA). This removes the hassle of carrying debit or credit cards or trading details like bank account numbers or IFSC bank codes.

UPI allows 24x7, instant money transfer between accounts of different banks - achieving the goal of interoperability. You can operate all your multiple bank accounts through a single UPI app. This contrasts with typical bank transfers that have a waiting period for new payees to get added.

Guide to UPI - Setting up and using it for transactions

There are multiple UPI apps that you can download on the major smartphone app marketplaces including iOS and Android. To sign up for the service, you must first get a UPI app such as the BHIM Kotakpay app (you are not restricted to using just your bank’s app) and register as a user.

As part of your registration with the app, connect your bank account to UPI and set your UPI PIN. This is a 4 to 6-digit passcode that you use to authorize transactions, which adds a layer of security to the mechanism.

As opposed to any mobile wallet, the UPI app does not require you to transfer money into it from your bank account. Instead, it directly debits and credits amounts into your linked bank account.

To use the app to initiate a transaction, login to the app, choose the UPI ID from where you wish to transfer the money, enter UPI ID/VPA of the recipient, enter the amount, confirm the transaction using the UPI PIN and voila - the funds get immediately transferred!

With the clear ease and convenience that the UPI platform brings to peer-to-peer payments and transactions, it comes as no surprise that the adoption of UPI among the Indian public has been seeing a steady rise over the past few months.

In addition to being used to pay for goods and services from merchants, UPI is also a convenient method of transferring funds between people (subject to daily and per-transaction limits, which vary from bank to bank) where the sender only needs to know the virtual payment address of the receiver.


With various platforms in the market bringing in more consumers to the world of digital payments an initiative like UPI will reduce the barrier to entry and make the payment infrastructure stronger.

With the ease of setup, built-in security, and availability across smartphones and various banks, UPI seems to be well poised to see massive adoption by Indian consumers.


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