Financial services players have invested significantly over the past years to propel the growth of Unified Payments Interface (UPI) ecosystem, and to ensure lower UPI transaction failure rate;, however, there needs to be some form of economic incentive for such players to further broaden the coverage of UPI among more users, National Payments Corporation of India (NPCI) CEO Dilip Asbe said at the Bharat Fintech Summit held here today.

Currently, there is no merchant discount rate (MDR) on UPI transactions, leading to no revenue for players investing in the technology. “There has to be economic incentive for the ecosystem to invest and grow. Today, UPI must have crossed 17 billion transactions a month, I think as a country we have potential to cross 100-150 billion transactions,” Asbe said.

“So how do we grow now. If we have to bring in 300-400 million people who are not really digital savvy, if you want them to come to digital platforms, there has to be some incentivisation. When UPI started there were players giving some incentives, so I think some of the practices would be required to expand the new segment. Similarly on the merchant side, it goes without saying,” he said.

Asbe said the NPCI, along with industry forums, has been working with the regulator and government to assess creating some reasonable economic incentives for the market to expand further. “I believe we should see some progress on that front. I don’t know when exactly, but we are in constant touch with policymakers to review the situation,” he said.

Onboarding millions on UPI

Asbe said there are massive efforts required to bring millions of new, less digital savvy customers, on the UPI ecosystem. “About 400-500 million people, if you want to bring them back to digital payments, there is a different level of efforts required. This population will be more vulnerable in terms of education and awareness so massive efforts are required,” he said.

Today, 95 per cent online frauds are initiated by consumers and ecosystem participants must invest in creating awareness about such frauds. On its part, the NPCI and the Reserve Bank of India (RBI) are running various awareness programmes in collaborations with prominent personalities, he said.

Further, industry players must also use new-age tech to identity potential cyber security risks. The country’s legal system must also evolve to ensure that fraudulent activities are penalised at appropriate level. ENDS