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Study of upi payments
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An Industry Oriented Dissertation Project On
STUDY OF UPI PAYMENT SYSTEM
submitted for the partial fulfillment of the requirement of the degree
of
MASTER OF MANAGEMENT STUDIES OF UNIVERSITY OF MUMBAI
Submitted by
SUSHANT RAJAN CHEULKAR
Roll No. 14
Specialization: Finance
Submitted To
Dr. Rupali More
SASMIRA’S INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH,
SASMIRA MARG, WORLI, MUMBAI. July 2020
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DECLARATION BY THE CANDIDATE
I hereby certify that the work which is being presented in this Industry Oriented
Dissertation Project entitled- “STUDY OF UPI PAYMENT SYSTEM
“in partial fulfilment of the requirement for the award of the Degree of Master of
Management Studies, University of Mumbai and submitted to the Sasmira’s Institute of
Management Studies and Research, Worli, Mumbai, is an authentic record of my own work
carried out during a period from January 2021 to march 2021 under the guidance of Dr.
Rupali More .
The matter presented in this project report has not been submitted by me for the award of
any other degree of this or any other Institute.
Wherever references have been made to intellectual properties of any individual /
Institution / Government / Private / Public Bodies / Universities, research paper, text books,
reference books, research monographs, archives of newspapers, corporate, individuals,
business / Government and any other source of intellectual properties viz., speeches,
quotations, conference proceedings, extracts from the website, working paper, seminal work
et al, they have been clearly indicated, duly acknowledged and included in the
Bibliography.
Name of the Students: Sushant Rajan Cheulkar
Signature of the Student:
Signature of Guide:
Name of Guide: Dr. Rupali More
Signature of co-Guide:
Name of co-Guide: Dr Satish Athawale
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CERTIFICATE BY THE GUIDE
This is to certify that Mr. / Ms. SUSHANT RAJAN CHEULKAR of
the two year full-time Master's Degree Programme in Management Studies (MMS),
(Finance / Marketing / Human Resource / Systems / Operations / IT ), Roll No.
has carried out the work on the Industry Oriented Dissertation Project titled STUDY OF
UPI PAYMENT SYSTEM
under my guidance in partial fulfillment of requirement for the completion of MMS as
prescribed by the University of Mumbai.
This Industry Oriented Dissertation Project Report is the record of authentic work carried
out by him / her during the period from January 2021 to march 2021
Place :-
Date :-
Signature of Guide:
Name of guide :- Dr Rupali more
Signature of co-Guide:
Name of co-Guide: Dr Satish Athawale
4. 4
MMS PROGRAMME, SEM IV, AY 2020-2021
INDUSTRY ORIENTED DISSERTATION PROJECT SUBMISSION
(FOR OFFICE USE ONLY)
Received two copies of Hard Bound Book and two CDs the Specialization Project Report
and two copies of Summary Sheet from Mr. / Ms. SUSHANT RAJAN CHEULKAR
Roll No. 14 Specialisation: Finance
of the Two Year Full-time Master's Degree Programme in Management Studies
(MMS), University of Mumbai.
STUDY OF UPI PAYMENT SYSTEM
Name of Guide: Dr. Rupali More
Designation
Place:
Date:
Receiver’s Signature: __
Receivers Name:
Signature of co-Guide:
Name of co-Guide: Dr Satish Athawale
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ACKNOWLEDGEMENT
This project has been a great learning experience for me. I take this opportunity Dr. Rupali
More, my internal project guides whose valuable guidance & suggestions made this project
possible. I am extremely thankful to her for her support. He has encouraged me and
channelized my enthusiasm effectively. I express my heart-felt gratitude towards parents,
siblings and all those friends who have willingly and with utmost commitment helped me
during the course of my project work.
I also express my profound gratitude to Dr. Kamal Tandon, Director of Sasmira’s Institute
of Management Studies & Research for giving me the opportunity to work on the projects
and broaden my knowledge and experience.
I would like to thank all the professors and the staff of Sasmira Institute especially the
Library staff who were very helpful in providing books and articles I needed for my project.
Last but not the least, I am thankful to all those who indirectly extended their co-operation
and invaluable support to me
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EXCLUSIVE SUMMARY
This project is about “STUDY OF UPI PAYMENT SYSTEM. Unified Payment Interface’ is
a system for inter-bank transfers that allows sending and requesting money. It is developed by
National Payments Corporation of India (NPCI) and regulated by Reserve Bank of India. BHIM-UPI
app is built over the Immediate Payment Service(IMPS) infrastructure and allows the user to
instantly transfer money between bank accounts of any two parties. Multiple bank accounts of a
client can be linked to the UPI app. BHIM app allow users to send or receive money to or from UPI
payment addresses, or to non-UPI based accounts (by scanning a QR Code with account number
and IFSC Code or MMID(Mobile Money Identifier) Code. Banks that are listed with the UPI
application by NPCI are termed as Payment Service Providers (PSP). PSP is a term which refers to
those banks which have their own mobile application to facilitate transaction. Issuers are those
banks which don't have their payments interface and rely on third party software for transaction
using UPI. In this paper, an attempt is made to identify the level of awareness among people about
the Unified Payment Interface and on what basis they select their mode of digital payment. This
research work was done to identify the adoption of UPI in money transfer system. Both primary
and secondary data has been used in this paper to make full utilisation in order to accomplish the
objectives.
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CONTENTS
Chapter
no
Details Page
No.
Candidate’s Declaration ii
Certificate by the Guide ii
Acknowledgement Iv
Abstract / Executive Summary v
List of Abbreviations xii
List of Figures/ Illustrations xv
List of Tables xvi
List of Charts xviii
1 INTRODUCTION 9
1.1 Background 11
1.2 Significance of the Study 32
1.3 Need for the Study 32
1.5 Aims and Objectives of Study 33
2 LITERATURE REVIEW 34-38
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2.1 Introduction 34
2.2
2.3
3 RESEARCH METHODOLOGY 39-41
3.1 Research Design 39
3.2 Sample Design 41
3.3 Data Collection 41
4 DATA DESCRIPTION & ANALYSIS 42-51
4.1 Introduction
4.2
5 SUMMARY & CONCLUSION 52-55
5.1 Findings & Conclusions 52
5.2 Recommendations 55
5.3 Limitations of Study 65
BIBLIOGRAPHY & REFERENCES 56
ANNEXURE I- Questionnaire 57
ANNEXURE II- Letter to the Company, if any
ANNEXURE III- Letter to the Respondents, if any
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1. INTRODUCTION
Unified Payments Interface (UPI) is an instant real-time payment system developed by
National Payments Corporation of India facilitating inter-bank transactions. The
interface is regulated by the Reserve Bank of India and works by instantly transferring
funds between two bank accounts on a mobile platform. Over the ten years, India has
made little slow but steady progress in E–Payments. Till now many methods are
invented in E Payments to digitalize the current Banking system. So UPI (Unified
payment Interface) is one of them. India is large scale country and so many are
unbanked or don’t know how to avail the banking services which are easy and secure.
But due less literacy rate and unknown factor led people, not to use or facing
difficulties in using Banking services. So we needed to overcome these difficulties and
to make payment process easy.
Some of the challenges currently India facing in E Banking sector are
• According to the data provided by RBI, number of E payments or non-cash
transactions stands to 6 per person per year
• About 1 crore plus stores have card acceptance infrastructure but currently 6 lakh
stores using this facility
To make E Banking sector more easy, convenient, secure Government started NPCI
(National Payments Corporation of India) in 2009, which controls all E Payments in
India and it is setup with guidance and support of Reserve bank of India(RBI) and
Indian bank association (IBA). After the starting NPCI, it has taken many steps to
simply and provides single interface payment system across all the systems. Some of
the key drivers are
• Simplicity:
Paying and receiving money should easy as making calls or operating a basic mobile
phone. When you want to send money to any person, the recipient should be easily
found with less details means if you have his phone number or Aadhaar number or
virtual address, then you don’t have enter multiple details like Account number, IFSC
code and other details
• Adoption: When you are sending money to any person, there should not be like
sender should have same mobile as receiver or vice versa. So system should be
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universal. User can send their money to anyone who have Bank account with easy
process. Similarly, it should allow full interoperability between multiple identifiers
such as Aadhaar number, mobile number, and new virtual payment addresses.
• Security: The main and most needed thing is the security. The end to end protection
between sender and receiver should be more. Data reading from smart phone to server
should be strongly encrypted. Similarly the process of sending money or receiving
should not be complicated because of security reason. It should be simple, convenient
with all securities.
• Cost - Considering the fact that about 150 million smartphone users exist today and
that number is expected to grow to 500 million in the next 5 years, solution should
offer a mechanism to take full advantage of that. Use of mobile phone as the
authentication (credential capture) device, use of virtual payment addresses, and use of
3rd party portable authentication schemes such as Aadhaar should allow both
acquiring side and issuing side cost to be driven down. This allows banks and other
payment players to focus on core business and allow half a billion phones to be the
primary payment device in conjunction with other 3rd party authentication.
Reserve Bank of India (RBI) has taken systematic steps to promote digital payments in
India and created National Payment Corporation of India (NPCI) as an umbrella
organization to develop low cost retail digital payment systems. In August 2016, NPCI
launched Unified Payment Interface (UPI), a next generation mobile based payment
system which enables real time bank payments. UPI leverages high teledensity in
India to make mobile phone as a primary payment device for both consumers and
merchants and to universalize digital payments in the country
The purpose of the paper is to study in detail the technology behind UPI and the value
addition that UPI brings with respect to the existing digital payment systems. UPI has
witnessed rapid growth that can be attributed to the expanding ecosystem promoted by
banks and increasing adoption by the users but primary usage for these early adopters
has been to make person-to-person remittances. For UPI to reach its full potential, it is
critical to develop merchant centric UPI payments solutions. This paper helps to
decode the technical architecture, transactional processes and security systems of UPI
which can help to develop innovative business solutions. India currently has
inadequate digital payment acceptance infrastructure for merchants and merchant
centric UPI solutions have the potential to fill this gap in a cost effective manner.
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UPI can be case study for both developing and developed countries to enable
universal, low cost digital payment system.
2. Background
Reserve Bank of India is the regulatory body with Payments and Settlements Systems
Act (2007) [5] being the primary legislation governing payments systems in India.
Making India “less cash” dependent and promoting digital payments has been a focus
area for RBI since last decade. The five yearly RBI Vision Documents which sets the
tone and vision for achieving key objectives in the payments ecosystem aptly sums up
the priority for RBI to transform the payments landscape in India. “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.”
The period 2016-17 has been the pivotal period for payments landscape in India, the
country witnessed profound changes in payments ecosystem with radical policy
decisions, introduction of new age payment systems and rapid changes in user
behavior. Demonetization was introduced during this period whereby 86% [7] of the
currency notes were rendered worthless overnight. During demonetization paper
money became scarce and one could witness serpentine queues in banks and ATMs to
withdraw meagre currency that was available. Business and trade almost came to a
standstill and the GDP growth rate decreased in spite of rapid introduction of new
currency notes and use of digital forms of payment. The year preceding
demonetization saw the emergence of mobile based digital wallets which witnessed
rapid adoption by a large smartphone using population. Emergence of mobile based
digital wallets was largely driven by new age private technology companies. During
the same period with the clear mandate from Reserve Bank of India to drive next
generation digital payments, National Payments Corporation of India (NPCI) set out to
create a new payment system called Unified Payment Interface (UPI). Unified
Payment Interface (UPI) was formally inaugurated by then RBI Governor on 11 April
2016 [8] and launched for public use on 25 August 2016.
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Reserve Bank of India has been relentlessly working in the direction of enabling a
digital payments ecosystem in the country. In this direction, RBI under its guidance
and with support from Indian Banks Association (IBA) enabled the formation of
National Payments Corporation of India (NPCI) as an umbrella organization for all
retail payments system in India with all leading bank as stakeholders/shareholders
[10]. NPCI was formed with the mandate to consolidate and integrate the disparate
systems with varying service levels into nation-wide uniform and standard business
process for all digital payment systems. The clear objective was to create a uniform
and affordable payment system by leveraging technology and enable financial
inclusiveness in the country. UPI was a culmination of a series of developments by
NPCI over a period of 8 years since its inception in 2009. The first step taken by NPCI
in this direction was the standardization, simplification and implementation of
National Finance Switch (NFS) [11] for all the banks of the country. NFS set the
common standard and enabled digital interoperability between all banks in the
country. NFS is now the backbone which powers the largest domestic ATM network
in the country.
The next revolutionary step for NPCI was to enable Immediate Payment System
(IMPS) [12] riding the interoperable layer of NFS. Prior to IMPS the modes for digital
transactions in banks were Real time Gross Settlement System (RTGS) and National
Electronics Funds Transfer System (NEFT). RTGS and NEFT are unsuitable for small
ticket digital retail payments due inherent limitations of these systems like high
transaction limits, delayed settlement in batches and fixed operating time hours. Thus
NPCI introduced IMPS, a real time retail payment service with round the clock
availability. IMPS is channel independent and can be accessed through mobile phone,
internet, ATM and Unstructured Supplementary Service Data (USSD) on feature
phones. IMPS provided a mobile based interoperable fund transfer service involving
various stakeholders such as banks, merchants, and telecom service providers. IMPS
works on immediate settlement where settlement takes place on at a granular
transaction level with instant transaction confirmation to both the remitter and the
beneficiary.
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IMPS transactions were enabled through mobile phones and can be considered the
precursor to Unified Payment Interface (UPI), since UPI transactions are settled
through IMPS. In India, mobile phone numbers are connected with bank accounts.
Leveraging this connectivity Mobile Money Identifier (MMID) was provided to
mobile users holding a bank account. MMID enabled the abstraction of the need to
know the bank account details of the recipient to make a payment. With IMPS users
could make Push payments using Phone Number and MMID or Account Number and
IFSC code of the recipient or request a payment using Phone number and MMID of
the recipient. IMPS transactions grew in value from Rs. 4.3 billion in 2014 to Rs.
1622 billion in 2016
IMPS transactions were being mainly used to transfer money using internet
banking but were not successful for retail small ticket transactions primarily for
two reasons;
1) The need to know the bank details or the MMID and Phone number of the recipient.
2) There was no common interoperable platform to connect both the payers and the
payees
India has been cash driven economy, primarily due to lack of infrastructure to make
digital payments. India has enough debit and credit card users which have been
steadily increasing over the years from 304 million cards in 2012 to 910 million cards
in 2017 [15] but digital payment acceptance infrastructure is grossly inadequate. The
number of POS machines installed at merchant locations across India is only 2.7
million [15] (1.5 million prior to demonetization) for a merchant base of over 20
million compared to 12.7 million POS machines in the USA [16]. The low number of
POS machines in India can be attributable to the high cost of POS machines which
typically cost $120 - 150 per machine. This low penetration of acceptance
infrastructure (POS machines) for digital payments has made ATM machines as the
focal point for dispensing cash which is then used for transactions. An interesting data
point in this regard is that value of transactions using a debit card at ATM Machines is
about Rs. 26,000 billion per annum versus Rs. 4,140 billion at POS machines [15] i.e.
consumers withdraw 6.2 times more money at ATMs and then pay cash to the
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merchants to transact. This is primarily due to lack of POS machines with Merchants.
Thus, UPI was conceptualized to enable a universal, low cost digital payment system
both for consumer to make digital payments with ease and merchants and businesses
to collect digital payments in a cost effective manner without the need for any POS
machines.
UPI has been launched recently. Therefor e, the data has been collected from
government and other bodies and compared different mode of payments and their
number of transactions are collected. Information has been drawn from e-journals,
articles from renowned analyst and newspapers. Thus, the study is conceptual and
descriptive type.
Common Features of UPI Systems are
• Ability to use personal mobile as the primary device for all payments
• Ability to use Aadhaar number, mobile number, card number, and account number in
a unified way. In addition, ability to pay and collect using "virtual payment addresses"
• Make payments only by providing an address with others without having ever
provide account details or credentials on 3rd party applications or websites
• Ability for sending collect requests to others
• Ability to make payments using 1-click 2-factor authentication all using just a
personal phone without having any acquiring devices or having any physical tokens
Common Features of UPI Systems are
1. Payer and payee account details for authorization
2. Authentication credentials (password, PIN, biometrics, etc. as required for debit,
can be bank provided or 3rd party provided such as UIDAI)
3. Transaction amount
4. Transaction reference
5. Time limit 6. Other details such as location, product code, mobile number, device
details, etc. as required
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Working Mechanism of UPI
UPI can be used for sending money and receiving money, who have smart phone with
internet connection and Bank account. Figure 2 shows complete mechanism of paying
and sending through UPI.
• First Step
To get started, first user has to download UPI application from Google play store or
any other 3rd party sources. It is not mandatory that you should download application
with respect to your Bank, You can download any other UPI application and you can
use it.
• Second Step
Then by using your mobile number, Bank accounts linked to your mobile number will
be searched. Then by entering last 6 digits of Debit card, your bank will be registered
with UPI application.
• Third Step
A VPA (virtual payment address) is to be created by user in next step. The VPA is the
unique address like email id and every user will get unique id and it is attached to their
Bank account and M Pin is set for Bank account. For example if you are using
Phonepe application, then you will get VPA as user1demo@ybl,985695826@ybl.
User can send and receive payment worth minimum Rs 1 up to Rs 100000 per day. As
current NPCI is not charging for the transactions. User will get his payment
notification in format of IMPS in Bank account statement.
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Fundamentals of Unified Payment Interface (UPI)
NPCI developed Unified Payment Interface (UPI) as a common interface or a platform
for all digital payment systems in India. NPCI is the owner, network operator, service
provider, and coordinator of the UPI Network. The Unified Payment Interface enables
architecture and a set of standard Application Pro- gramming Interface (API)
specifications to facilitate digital payments using a mobile phone [17]. UPI leverages
high penetration of mobile phones and growing adoption of smartphones, data and
internet to enable mobile based instant payment system in India. UPI allows users to
send or request money instantly from their bank accounts using a mobile phone,
making mobile phone a primary payment device for the masses. UPI uses IMPS as the
switching mechanism to enable instant payments and settlement between different
financial institutions. With UPI everyone with a bank account in India can create their
Virtual Payment Address (VPA or UPI ID) and start transacting using a mobile phone.
This Virtual Payment Address for e.g. abc@xyzbank becomes a person’s unique
payment identity and abstracts the need to share bank details while transacting. UPI
considerably simplifies digital payments, instead of issuing cards to a large population
which is costly and time consuming UPI enables mobile phone a primary device for
authorizing and making payments. Also a mobile phone combined with a unique
payment ID makes it a low cost payment acceptance device thus making digital
payments universal, easy and low cost.
Key Features of UPI
1) UPI enables personal mobile to be used as a primary device for all payments
including person to person, person to entity, and entity to person. Using UPI, users can
seamlessly make or request payments with ease and security to/from friends,
merchants or pay their bills etc. without the need to share banking credentials. User
can consolidate multiple banking relationships using a single UPI App which makes
for good user experience for users.
2) The payments can be initiated both by sender (payer) and receiver (payee). This
enables a personal mobile to be used to “pay” someone (push) as well as “collect”
from someone (pull).
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3) UPI allows users to create their unique Virtual Payment Address thus enabling
users to make payments only by providing a payment address without the need to
provide sensitive details like bank account numbers or credentials on third party
applications or websites. The payments can be done using multiple identifiers like
Virtual Payment Address, Aadhaar Number or Account Number & Indian Financial
System code (IFSC).
4) UPI provides a standard set of 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 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.
5) UPI uses One-click 2-factor authentication for safe and secure payments using a
personal mobile phone without the need for any separate acquiring devices or physical
tokens.
IMPROVEMENTS IN UPI OVER EXISTING PAYMENT SYSTEMS
1) Pull Based Mobile transactions: Current digital payment systems including cards
and online payments are push based transactions i.e. transactions are initiated by the
customer. There is no mechanism for the merchant to initiate a payment request (pull)
which the customer can approve and pay. UPI enables both real time push and pull
transactions using a mobile phone.
2) Interoperable User Interfaces: UPI allows payments across interfaces i.e.
payment can be requested on one interface and transaction can authorised on a different
interface. For e.g. Merchant can request a payment from a website which user can
authenticate and pay using a mobile phone.
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3) Abstraction of Bank Details: There is no need to share any sensitive bank details
like account number etc. to make a transaction. Users can create their unique virtual
payment address which serves as their unique identity to make or receive payments. This
makes for secure payments since user is not required to share any sensitive data on third
party interfaces.
4) 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.
5) Mobile first approach: UPI is designed to embrace the smartphone using population in
India to enable low cost and universal digital payments. With UPI there is no need to create the
consumer side hardware infrastructure (cards etc.) to enable digital payments. In India, almost
every adult has a bank account and a mobile phone. UPI uses this ubiquitous relationship to
enable universal digital payments in India.
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Other mobile payment systems like e-wallets work in their own silos i.e. the payer and
payee need to be on the same platform the transact. In UPI, only the payment address of the
beneficiary is required and amount is credited into the bank account. Also, to transact in e-
wallets, users need to pre-load the money into the wallet accounts which means their money
remains stuck in the wallet account till it is again redeemed back into the back accounts.
While in UPI there is no need to preload any wallet, money is directly debited from the
bank account of the payer and credited into the bank account of the payee.
UPI Architecture
UPI works on a common layer or a unified interface developed and hosted by NPCI. This
common layer orchestrates transactions and ensures settlement across bank accounts using
IMPS and Aadhaar Enabled Payment System (AEPS). Banks, financial institutions and
other entities that provide UPI services connect to the NPCI’s unified interface through
standard APIs to enable transactions from Virtual Payment Address avoiding the need to
share account details or credentials. In UPI solution, payment authentication and
authorization are always done using personal phone. Since this layer offers a unified
interface, any-to-any interoperable payments can be accomplished using standard set of
APIs.17
All APIs are exposed as stateless service over HTTPS using XML input and output and all
entities consuming UPI services must ensure idempotent behavior for all APIs. These APIs
are asynchronous in nature meaning once the request is sent, response is sent back
separately via corresponding response API. This allows the response to API call to return to
the caller immediately after queuing the request. All request-response correlation must be
done via the transaction ID set by the originating point. Callers are expected to call the API
with a unique transaction ID for which response is sent via a response API exposed by the
caller. This allows same APIs to be used for instant payment as well as delayed payments.
This also allows APIs to scale without having to wait in a blocking mode.
There is a set of standard APIs exposed to various participants of the UPI ecosystem key. A
set of Financial and Non-Financial transactions can be done using these APIs. Apart from
transactional APIs there are a set of Meta APIs to ensure that the entire system can function
in an automated fashion. These Meta APIs allow PSPs to validate accounts during customer
20. 20
on boarding, validate addresses for sending and collecting money, provide phishing
protection using white listing APIs, etc. Figure 2 shows the high level architecture of UPI.
Some of the key APIs to enable UPI transactions are:
1) Payment API: This is the primary 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.
1) 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
21. 21
provide such virtual (tokenized) address to others (individuals, entities, etc.) without having
to reveal actual account details.
2) 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.
Virtual Payment Address
Every payment transaction requires source (remitter) account details to make the debit and
destination (beneficiary) bank details to make the credit. UPI enables the users to create
their Virtual Payment Address (UPI ID) for their bank accounts. This Virtual Payment
Address is an abstract form to represent and uniquely identify the bank account details in a
normalized notation. Thus for any transaction to take place it is vital to resolve the Virtual
Payment Address into the actual bank accounts to make the debit and credit transactions. In
current UPI architecture the Virtual Payment Address is denoted as “xyz@psp” form where
xyz can be any unique name and psp is the name of the Payment Service Player whose
application the user uses to create the VPA. The Virtual Payment Address is created by the
PSP UPI App and is stored in the PSP database while the bank account number and IFSC
Code (Global Address) is stored in the NPCI Mapper. PSPs expose their Address translation
algorithms with NPCI to enable it to decode the VPA into valid bank account details. Thus,
The Virtual Payment Address is resolved by the respective PSP UPI Apps while the
Account Number and IFSC Code is resolved against the Virtual Payment Address by the
NPCI Central Mapper. This is a unique feature in UPI since it removes the need to know the
full bank details of parties making a transaction. Users can exchange their Payment Address
which is sufficient to make the transaction.
Transactions in UPI
As mentioned above UPI allows a set of Non-Financial and Financial Transactions.
Financial transactions include two types of transactions:
1) Pay Request (Push Payment): This transaction is initiated by the user in which money is
pushed into the bank account of the beneficiary. This Push Payment can be done using the
Account Number and IFSC Code, Aadhaar Number or the Virtual Payment Address of the
beneficiary.
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2) Collect Request (Pull Payment): A Collect Request transaction is initiated by the
beneficiary to pull funds from the payer by using Virtual Address. The user can also define
an expiry time limit of the Collect Request. The payer will receive the collect request on his
PSP UPI App which is to be authenticated using 4 - 6 digit MPIN to complete the
transaction.
Transacting Parties in UPI
There can be maximum up to four transacting parties in the UPI system. These four parties
consist of two PSPs which provide the UPI interface through the PSP UPI mobile apps one
each for remitter and beneficiary and two banks, one each of the remitter and the
beneficiary respectively. The two PSPs facilitate the transaction and enable debit from the
remitter’s bank account and credit into the beneficiary’s bank account.
Transaction Authorization
All digital transactions in India must adhere to two factor authentication. In case of UPI,
transactions are authorized and authenticated on the personal mobile phone of the user
without the need of any external device. The first factor is the hardbound mobile device
fingerprint which is authenticated by the PSP UPI App. The second factor to authenticate
the transaction is a four to six digit MPIN which is created by the user and captured on the
NPCI libraries embedded in the PSP UPI App. These libraries are available for all major
mobile operating systems viz. Android, iOS & Windows. These libraries allow secure
capture of credentials like OTP and MPIN. The secured credentials are captured by the
NPCI libraries which use PKI Encryption. These secured credentials (MPIN) are sent to the
issuer bank for authentication and upon successful authentication a transaction is complete.
Transaction Flow of UPI Payments
1) Customer Registration
a) Users can download any PSP UPI application from app discovery platforms
like Google Play or Apple App Store on mobile phone with mobile number registered with
their bank.
b) The PSP UPI application will send an encrypted outward SMS from the us-
er’s mobile phone automatically to check the authenticity of the mobile number registered
with user’s bank and to enable hard binding of the mobile device with the mobile number.
This hard binding of the device acts a device fingerprint.
23. 23
c) User can now create unique Virtual Payment Address (for e.g. abc@xyzbank)
which will be unique payment ID for the users.
2) Bank Account Registration
a) Users can register their bank accounts on the PSP UPI App. The Issuing Bank
authenticates the mobile number registered with the bank and, it provides list of all bank
accounts registered against the mobile number which is displayed to the user on PSP UPI
App.
b) The PSP stores the account details received by the Issuer Bank in its data-
base. At this stage, the PSP Database contains the information such as Registered Mobile
Number, Virtual Payment Address, Name of User on PSP UPI App and Bank Name,
Account number and IFSC code.
c) User now needs to create a Mobile Personal Identification Number (MPIN) to
authenticate the transactions. An OTP Request is generated by the PSP UPI App to NPCI
for the newly added account. NPCI requests an OTP from the Issuer Bank and the Issuer
banks sends the OTP over SMS on the registered mobile number of the user.
d) To establish the personal bona fide of the user, the user is asked to enter the last 6 digits
of Debit card number, expiry date, OTP received on the registered mobile number. In order
to create the MPIM, user enters the desired MPIN on NPCI library embedded in the PSP
UPI app.
e) The Card details and OTP is authenticated by the Issuer Bank and UPI PSP application
sends this MPIN to NPCI which in turn send it to Issuer bank by encrypting it with the
public key using PKI. The Issuer bank decrypts the encrypted MPIN with its Private Key
and confirms the setting of the MPIN.
3) Transaction Flow
a) To make a Push Payment (Pay Request) the user needs to enter either the Virtual
Payment Address or the Account number and IFSC Code or Aadhaar Number of the
beneficiary.
24. 24
b) User enters the MPIN on NPCI Libraries embedded in the PSP UPI App. MPIN is
encrypted using NPCI public key and sent to UPI which is decrypted using NPCI private
key. NPCI again encrypts the MPIN using Issuer Bank’s Public key and sends it to the
Issuer Bank which then decrypts the MPIN using its own Private Key. Issuer Bank then
authenticates the MPIN and debits the Remitter’s bank account and credits the
Beneficiary’s bank account.
c) Similarly in case of Pull Payment (Collect Request) user makes a Collect Request by
entering the Virtual Address of the Payer. Beneficiary’s PSP UPI App sends the request to
NPCI which in turn sends the request to Remitter’s PSP for resolution and authorization.
d) Payer needs to enter MPIN on Payer PSP UPI App to authenticate the payment. On
successful MPIN authentication by the Issuer Bank, the amount is debited from the bank
account of the Payer and instantly credited into the bank account of the Beneficiary.
Security in UPI
In India it is mandatory to enable two factor authentication to make any digital transaction.
Two factor authentication means one component is required to establish the bona fide
identity of a person and second component is password/ credentials known only to the user.
UPI uniquely employs one-click-two-factor authentication system whereby in a single click
user is able to authenticate both the factors of authentication. The mobile device fingerprint
is used as the first factor of authentication and to establish the bona fide identity of the user.
The most critical aspect of security is to bind the mobile number with the device at the time
of profile creation of user on PSP UPI App. This is done by sending an encrypted outward
message from the bank registered mobile number of the user. This message creates a device
fingerprint of the mobile phone by binding the mobile number with the Device ID, IMEI
ID, SIM Number and PSP App ID. In case there are any changes in the mobile fingerprint
i.e. Mobile Number, Device ID, IMEI ID, SIM Number and PSP App ID are changed, the
user is required to re-authenticate the mobile device. The second factor of authentication is
4 - 6 digits MPIN that the user creates and uses to authenticate the transaction.
For data security, data has been classified into different classes of information:
25. 25
1) Sensitive data: Such data is not to be stored and can only be transported in encrypted
format. Sensitive data includes passwords, PIN and biometrics etc.
2) Private Data: Data such as bank account number. Private data can be stored by the PSP
but only in encrypted format.
3) Non-sensitive data: Data such as Name, transaction history i.e. amount, timestamp,
response code, location, etc. can be stored in unencrypted form.
In the current UPI architecture security is handled in following ways:
1) Identity and Account Validation: Veracity of personal identity and bank account is
validated as a first step during User Registration which is done by sending an outward SMS
by the PSP UPI App automatically without any customer intervention. This outward SMS is
sent in encrypted form from Mobile number is then authenticated by the issuer bank to
ensure that it is the registered mobile number of the user holding a valid bank account with
the bank. The PSP UPI App enables device fingerprinting through this automated outward
encrypted SMS which hard binds the Mobile number with the device. This ensures that the
transactions originating from the hardbound device are secured at the first step itself.
2) Application security: Each PSP UPI app is certified by PCI-DSS and RBI-Certin. NPCI
Utilities and Libraries are embedded in the PSP UPI app and sensitive data such as MPIN
and One Time Password (OTP) can only be input on these NPCI Utilities and Libraries. The
encrypted credentials are base 64 encoded by the common library and given back to PSP
application for subsequent transports through UPI.
3) Transaction Level Security: Transaction authorization and authentication is spilt between
the PSP UPI App and the Issuing Bank. The PSP UPI app validates the device fingerprint
which is the first factor of authentication. To authenticate each transaction user has to input
4 - 6 digit MPIN which is authenticated by the Issuing Bank. Any transaction can only go
through if the device fingerprint and the MPIN are validated. User is fully in control to
prevent any unsolicited and malicious payment requests. The user needs to personally input
the MPIN to authenticate the transaction and initiate any debit from his bank account.
4) MPIN Security: The MPIN can only be captured on the NPCI library i.e. on NPCI
interface embedded in the PSP UPI App. This interface is invoked while entering the MPIN
for an interoperable transaction. The MPIN is communicated by NPCI to the Issuer Bank
over a secure channel. Using Public Key Infrastructure (PKI) encryption system UPI
encrypts the MPIN using the Public key and the MPIN is decrypted by the Issuing Bank
using its Private key.
26. 26
To ensure message security, trust, non-repudiability it is mandatory that all APIs
communicate over HTTPS layer, every message is digitally signed and has unique message
id for each request response paid and unique transaction id. To prevent phising, Payer’s UPI
PSP application should mandatorily show verified payee’s name to the payer in any
payment request.
UPI is significantly safer than any Cards or e-Wallet transaction since any payment is
tightly tied to your mobile hardware and checks all device fingerprints (for e.g. IMEI
Number, SIM Number etc.) hence it is technically impossible to duplicate the payment
environment. In case of Cards and e-Wallets the biggest security threat is lack of second
factor of authentication (i.e. password) while making a transaction. This makes the cards
and wallets vulnerable to system level breaches since transactions can be system generated
by a hacker without the need of a password, thus technically a hacker can make thousands
of fraudulent transactions simultaneously.
Impact of UPI on Payments Industry
UPI has witness rapid growth since its launch in August, 2016 in terms of number of users,
volume and value of transactions. Currently 55 banks are live on UPI platform with more
than 60 PSP UPI apps available on app discovery platforms [18]. Within 12 months of
launch of UPI, more than 20 million users have downloaded various UPI PSP apps. Total
value of transactions on UPI has grown 82% month on month since its launch with total
transacted amount of Rs. 227 billion till August 2017 [19] (Figure 3). The monthly value of
transactions on UPI has already overtaken monthly transactions of all e-wallets put together
in India. The value of transactions on UPI is currently is less as compared to value of credit
and debit cards transactions which constitute about Rs. 2700 billion per month [15] but UPI
is growing at a much faster rate.
Currently person-to-person money transfers constitute majority of UPI transactions while
person-to-merchant transactions are currently very less. This is due to lack of merchant
acceptance infrastructure at merchant payment points to accept UPI payments. UPI usage
for merchant payments is expected to increase with more businesses enabling UPI payments
for their customers. Current POS machines accepting payments through debit and credit
cards need to be reconfigured and updated to accept UPI payments. The updated POS
machines should be able to display the UPI QR code of the merchant to enable the
27. 27
UPI Txn Amount (Rs. billion)
Figure 3. UPI transaction growth.
customer to scan the QR code and make payment using UPI PSP Apps. Also, POS
machines should be able to get the confirmation status of UPI transactions. As a payment
mode, UPI has the potential to make debit cards redundant since with UPI there will be no
need to carry your debit card as your mobile phone will work as your debit card. However,
UPI in the current form does not support credit cards hence UPI as a product does not
compete with the credit cards. For online payments UPI clearly offers better user experience
vis-à-vis debit cards or net banking payments.
Impact on Payments in Physical World: Payments in the physical world include cash and
debit or credit card transactions. UPI has the potential to transform payments in the offline
world as it offers a cost effective alternative to both cash and cards transactions. With UPI
merchants do not require expensive POS machines to collect digital payments through
cards, a merchant will be able to display a unique UPI QR Code which the customer can
scan with mobile phone and make the payment with the amount being credited instantly
into merchant’s bank account. Merchant can receive payment confirmation over their
mobile phones. Most cash transactions at merchant point happen due to lack of digital
acceptance mechanisms with merchants. The customers can also directly pay the merchant
at merchant’s UPI ID and merchant will receive payment confirmation on the mobile
phone.
28. 28
Impact on Online Payments: Currently majority of online transactions are enabled by
payment gateways with Debit/Credit Cards and Netbanking being the primary modes of
payments. Users are required to input all the sensitive details including Card Numbers, Card
Verification Value, Netbanking usernames and passwords etc. This makes digital payments
vulnerable to data leaks and frauds. Also, there are a number of network hops between card
networks, issuer and acquiring bank to enable a transaction which leads to high failure rates
of transactions. With UPI customers need not provide any information, a customer can
simply scan a QR code displayed on the website using a mobile phone and payment can be
completed in seconds with a few network hops. This can not only avoid data leaks of any
sensitive data but also increases transaction success rates.
Impact of UPI on Businesses
Apart from being the most cost effective, fast and seamless payment method UPI enables
digital payments for an entire spectrum of businesses both for brick and mortar and online
merchants. For physical businesses, each employee can be enabled to collect digital
payments since there is no need of any POS machine, each employee can be provided a
unique UPI ID and QR Code which the employees can present to the customer to collect
payments. Apart from proximate payments where the customers is physically present at the
billing counters, UPI opens unique opportunities for businesses to collect payments where
customers are not physically present for example. Insurance premium collection, school fee
and electricity bill payments etc. where payment request can be sent to the customer and
customer can pay remotely using mobile phones. Another important use case for businesses
can be to enable payment at the time of delivery. In India there is a large prevalence of cash
on delivery, almost 60% of ecommerce sales happen with cash payment being made at the
time of delivery. Such payment at time of delivery can be converted into digital payment at
the time of delivery using UPI whereby a customer can easily pay through UPI at the time
of delivery.
29. 29
The Way Forward—UPI 2.0
UPI has witnessed rapid growth that can be attributed to the expanding ecosystem promoted
by banks and other payment service players and increasing adoption by the users. Security,
ease of use and development of business solutions are paramount to make UPI as a payment
system of choice both for users and businesses. In this direction NPCI is coming out with an
upgraded version of UPI called UPI 2.0 with enhancements in security, ease of use for
customers and which open new use cases for businesses and expand the UPI ecosystem.
The salient features of UPI 2.0 are expected to include:
Transaction authentication using Biometrics: Currently users can authenticate their
payments using 4 - 6 digits MPIN. This MPIN can be self-generated by the user on the PSP
UPI App with the ability to change the MPIN as and when required. This MPIN is captured
by secure NPCI libraries and authenticated by the Issuer Bank. However this use of MPIN
has its own limitations with users forgetting the MPIN and entering wrong MPINs leading
to failed transactions. Another perceived risk is fear of fraudulent transactions in case of
loss or theft of mobile phone. To overcome these issues UPI 2.0 will include transaction
authentication using biometrics of user like fingerprint or iris prints. User will have the
option to authenticate the transactions using his/her biometrics. In order to enable biometric
authentication UPI has been integrated with Unique Identification Authority of India
(UIDAI) which provides online authentication services including biometrics and OTP
authentication. UIDAI is the central repository of biometric data of more than 1.16 billion
or about 87% Indians who have registered for national unique identity service through
Aadhaar. Also, Aadhaar Number of the user is now mandatorily mapped to the bank
account of the user. Mobile phone manufacturers are coming up with mobile phones which
can read fingerprints and iris prints of users. Such devices will be required to be certified
and registered with UIDAI to enable them to capture the biometrics of the user. Once the
user decides to authenticate the transaction using biometrics, fingerprint or iris print in
captured on the mobile phone and communicated to NPCI in encrypted form which then
invokes the UIDAI authentication API on behalf of Issuer Bank to authenticate the
biometrics.
UPI Payment Mandate: One of the biggest use cases for consumers and businesses is to
make periodic recurring payments like utilities bill, school fee, insurance premium and loan
EMI payments. To enable businesses to accept periodic payments and hassle free
30. 30
experience for customers UPI 2.0 will have functionality where customers can provide one-
time authentication for recurring payments to various merchants and billers. While the
mandate creation is a one- time activity, it allows user’s account to be debited as per the
agreed terms and condition, without the need for user to authenticate the transaction every
time. UPI will offer the mandate service that will allow both remitter and beneficiary to
create mandates or standing instructions through their respective banks. This mandate shall
be registered immediately post the one time authentication by the remitter. To start with
UPI 2.0 is expected to support only revocable mandates and mandates can be created on
Virtual Payment Address only.
DIGITAL PAYMENT MODES IN INDIA
There are number of facilitators which are leading to the growth of digital payment
and transition from cash economy to a less cash economy. These facilitators include
penetration of internet connectivity on smart phones, non-banking financial institution
facilitating digital payment, one touch payment, rise of financial technology sector and
push by government either by giving incentives or tax breaks. Today there is a positive
atmosphere for growth of digital payment in India. Currently there are several modes
of digital payments available in India. These include:
● Online or mobile wallets
● Prepaid credit cards
● Debit/RuPay cards
● UPI: Unified Payment Interface
● NEFT: National Electronic Funds Transfer (NEFT)
● RTGS: Real Time Gross Settlement.
31. 31
COMPARATIVE ANALYSIS OF ALL DIGITAL PAYMENTS
MODES
Modes of
Payment
Basis of
difference
Debit /
Credit
Card
RTGS NEFT IMPS MOBILE WALLET UPI
Suitable for Online/offli
ne merchant
sale.
High value
online
transactions
High value
online
transactions.
Instant
transfer
Small-ticket
transactions.
Instant transfer
Transaction
limit:
Set by card
issuer
Minimum 2
lakh. No
maximum
limit
There is no
ceiling on the
minimum or
maximum
amount that
can be
transferred
Rs 2 lakh per
day
Rs 20,000 per
month (Rs 1 lakh
for
KYC-complia
nt wallet
holders)
Rs 1 lakh
Details
required:
Card number,
Account
number
Account
number
Account
number
Login ID &
password
VPA (virtual
payment ID)
CVV,
Expiry date,
PIN
Password
Beneficiary
registration
IFSC code
Password
Beneficiary
registration
IFSC code
Password
Beneficiar y
registration
IFSC code
of recipient, m-
Pin
32. 32
Cost per
transaction:
Debit cards:
Up to
0.75%- 1%
Credit cards:
around 2.5%
per
transaction
Outward
transactions
upto Rs 55 as
per
transaction
Up to Rs 25
per
transaction.
Rs 5-15,
depending
on
transaction
amount.
Only if you
transfer money
from your wallet
into your bank
account.
Less than 50
paise per
transaction.
Significance of the Study
Unified payment interface is the one of the recent innovation introduced by national
payment corporation of India. After the implementation of UPI there is a dramatic
changes in the payment method. Hence it is important to know the benefits and
drawback of UPI services and customer perception towards new innovation adopted
by the national payment corporation. In this study the researcher aims to identify the
customer preference towards unified payment interface and to know the impact of
unified payment interface in customer satisfaction.
Need For the Study
UPI is an abstraction over standard payment transfer mechanism like IMPS. It helps to
hide sensitive account information along with consumer convenient. Also UPI is fast
and does not involve the costs like debit card or net banking. By using statistics
government and other bodies the study will approach to understand, discuss and bring
out the issue relevant to the title
33. 33
Objective
1. To find out the most preferred mode and application for digital payments by the
people.
2. To find out the frequency of digital payments by different age and income groups.
3. To find out the problems encountered while using UPI.
4. To suggest the measures for attracting more consumers
34. 34
2. LITERATURE REVIEW
2.1 Introduction
In this study the researcher aims to identify the customer preference towards unified
payment interface and to know the impact of unified payment interface in customer
satisfaction. The researcher’s find out the below review of literature which is relevant
for in this study.
• BabitaSingla, Manish Bansal (2015)
in their research found that the shoppers are happy with plastic use, and the non-
platinum card clients are fascinated to utilize the card for buys and mean to utilize the
card in not so distant future. However the banks and other financial institutions are
motivating the use of plastic card.
• KhuramShafiq and Khalil Ahmad (2015)
Is plastic Money Matter for Consumer Buying Behavior? This examination gives the
affirming data since buyers feel good in spending through plastic cash as easy access
of money, no cash carrying risks and reward shopping are the major factors that plays
important role behind it.
• Rouibah (2015)
showed that poor security, lack of trust, fear of failure, high charges and poor
familiarity were the major constraints that affected payments. Besides, security
features of internet, banking facilities, privacy and quality of services were also
affecting adoption of epayments.
• Rathore (2016)
stated that digital payment using wallet was highly convenient for consumers in
purchasing products through online without physical movements across places.
35. 35
• Dr. Stitch ShewtaRathore (2016)
"Appropriation of Cashless transactions By Consumers" her investigations disclose to
us computerized wallets are rapidly getting to be standard method of online
installment. Customers are embracing advanced wallets at end unfathomably quick
pace, to a great extent because of comfort and convenience.
• RoopaliBatra , NehaKalra (2016)
"Are Digital wallets The Newcurrency?" her investigations let us know in a period of
digitalization, the examination intends to contemplate the client recognition, utilization
design inclinations and fulfillment level with respect to advanced wallets in view of an
investigation of 52 respondents. It additionally recognizes the hindrances and
difficulties to the selection of the same. The outcomes demonstrate that there exists a
tremendous undiscovered market for computerized wallets both regarding expanding
mindfulness and also its use.
• K. C. Balaji and K. Balaji (2016)
"A Study On Demonetization And Its Impact On Cashless Transactions" considered
that the development of the cashless exchange framework is achieving new statures.
Individuals tend to move to cashless exchanges. It is on the right track to state that the
cashless framework is a prerequisite as well as a requirement for the general public.
• KunalTaheam, Rahul Sharma and saurabhGoswami (2016)
"Drivers Of Digital Wallet Usage: Implications For Leveraging Digital Marketing"
The outcomes from this investigation highlighted on various elements that inspired
individuals to utilize computerized wallets for making installments. Individuals in
Punjab have been found have been discovered utilizing advanced wallets because of
the intentions of controllability and security, societal impact and helpfulness and
requirement for execution improvement.
• Singh (2017)
concluded that there was significant difference between education of consumers and
adoption of digital payment. The perception of consumers for digital payment had
positive and significant effect on adoption of digital payment among consumers.
36. 36
• Bappaditya Mukhopadhyay (2016)
studied cashless payments in India. He developed a theoretical model of payment
decisions made by consumers and sellers. He found that the convenience of cashless
transactions weighed against the temptation to evade taxes.
• Rahul Gochhwal(2017)
has done research on the advancement in payment systems through Unified Payment
Interface and found that UPI is the most advanced payment system in the world as it
includes low transaction cost and instant settlement as there are no intermediaries
involved. UPI has allowed different banks to communicate with each other and has
enabled interoperability between disparate bank payment systems.
• Suma Vally and Hema Divya(2018)
studied consumer adoption of digital payments in India. The results indicate that the
deployment of technology for digital payments have improved the performance of
banking sector and able to achieve the motive cash less country. The study gives
emphasis to the percentage of awareness on maximum utilization of technology.
Banks should take effective measures in creating awareness towards the effective
usage of technology and security.
• Somanjoli Mohapatra(2017)
analysed e-transaction process through UPI where he defines the various features of
UPI and its app BHIM-UPI. The full payment mechanism and security features are
described in this paper and comparison has been done between different online
payment apps. The UPI seeks to make money transfers easy, quick and hassle free.
• Roshna Thomas & Dr. Abhijeet Chatterjee(2017)
assumes UPI as the catalyst tool supporting digitalization and through his research he
found the utility, prospects and issues of UPI payments. According to him, major
challenge for UPI adoption is financial inclusion where most of the rural population
don’t have access to the banking sector and other challenge is mobile services as
services provided by the service operators are still out of the reach of lot many people.
37. 37
In order to overcome these situations wallets were not allowed to provide the UPI
services as it is in communication with the banks with whom the customer can link
their UPI.
• Somanjoli Mohapatra (2017)
In their study reported that the single interface across all NPCI systems besides
creating interoperability and superior customer experience. The UPI seeks to make
money transfers easy, quick and hassle free. The proliferation of smart phones, the
availability of an online verifiable identity, universal access to banking and the
introduction of biometric sensors in phones will proactively encourage electronic
payment systems for ushering in a less-cash society in India.
• Radhika Basavaraj Kakade, Prof. Nupur A. Veshne (2017)
In their study reported that the UPI has made digital transaction for individuals as easy
as sending text messages. Service is available 24X7, not like RTGS or NEFT which
don’t work on holidays or during non-banking hours. This will bring enormous
efficiency in the system and help India become a truly cashless economy.
• Roshna Thomas, Dr. Abhijeet Chatterjee (2017)
The study reported that UPI is a tool with compatible features that can make monetary
transactions easy and affordable to the customers though it is difficult to sideline the
challenges. A strong Aadhar platform (UID) combined with statistics for the country
pertaining to increased financial inclusion, Smartphone adoption and telecom
subscription indicate positive prospects for UPI whereas competition from mobile
wallets and possible cases of failure from banks to overcome technical errors
especially relating to the front-end platform designed by them may negatively impact
the scope of this innovative payment tool.
• Ravish Rana (2017)
In their study reported that adoption of digital payment is influenced by the education
level of the customer. If a person has studied beyond matriculation and internet savvy,
he or she will be inclined to use the digital payment mode. It was also found that in the
areas/region where education level is high such as Delhi NCR and other metropolitan
area, the possibility of acceptance of digital payment is much higher. The growth of
38. 38
users of Smartphone and internet penetration in such area also facilitated the adoption
of digital payment.
39. 39
Chapter 3
Research Methodology
3.1Research Design
METHODOLOGY
The data is based on both primary and secondary source of information. Data
Collection Tool for primary data was structured questionnaire with a set of questions.
The questionnaire related to research study was circulated online to gather all relevant
information. Convenient sampling method was used on respondents who were
surveyed through structured questionnaire. Respondents include most of the college
students in the region of Chandigarh who use digital payments at various outlets and
for inter-bank payments. Certain useful findings were made from Secondary Data
collected using previous research study on similar topics and other websites.
Research methodology is the path through which researchers need to conduct their
research. It shows the path through which these researchers formulate their problem
and objective and present their result from the data obtained during the study period.
This research design and methodology chapter also shows how the research outcome
at the end will be obtained in line with meeting the objective of the study. This chapter
hence discusses the research methods that were used during the research process. It
includes the research methodology of the study from the research strategy to the result
dissemination. For emphasis, in this chapter, the author outlines the research strategy,
research design, research methodology, the study area, data sources such as primary
data sources and secondary data, population consideration and sample size
determination such as questionnaires sample size determination and workplace site
exposure measurement sample determination, data collection methods like primary
data collection methods including workplace site observation data collection and data
collection through desk review, data collection through questionnaires, data obtained
from experts opinion, workplace site exposure measurement, data collection tools
40. 40
pretest, secondary data collection methods, methods of data analysis used such as
quantitative data analysis and qualitative data analysis, data analysis software, the
reliability and validity analysis of the quantitative data, reliability of data, reliability
analysis, validity, data quality management, inclusion criteria, ethical consideration
and dissemination of result and its utilization approaches. In order to satisfy the
objectives of the study, a qualitative and quantitative research method is apprehended
in general. The study used these mixed strategies because the data were obtained from
all aspects of the data source during the study time. Therefore, the purpose of this
methodology is to satisfy the research plan and target devised by the researcher. A
research designs is the arrangement of conditions for collection and analysis data in a
manner that aims to combine relevance to the research purpose with economy in
procedure. Research Design is the conceptual structure with in which research in
conducted. It constitutes the blueprint for the collection measurement and analysis of
data.
Research Design includes and outline of what the researcher will do form writing the
hypothesis and it operational implication to the final analysis of data. A research
design is a framework for the study and is used as guide in collection and analysing
the data. It is a strategy specifying which approach will be used for gathering and
analysing the data. It also includes the time and cost budget since most studies are
done under these two-cost budget since most studies are done under theses tow
constraints. The design is such studies must be rigid and not flexible and most focus
attention on the following: -
❖ What is the study about?
❖ Why is the study being made?
❖ Where will the study be carried out?
❖ What type of data is required?
❖ Where can be required data be found?
❖ What period of time will the study include?
❖ What will be sample design?
❖ What techniques of data collection will be used?
41. 41
❖ How will the data be analysed?
❖ In what style will the report be prepared?
3.2 Sampling design
The study is an empirical one based on sample survey method. Sample was conducted
among people who are graduated and senior citizen.
3.3Data collection method
Primary research
Primary research is any type of research that you collect yourself. Examples include
surveys, observations, and ethnographic research. A good researcher knows how to
use both primary and secondary sources in their writing and to integrate them in a
cohesive fashion.
It is first hand data, which is collected by researcher itself. Primary data is collected by
various approaches so as to get a precise, accurate, realistic and relevant data. The
main tool in gathering primary data was investigation and observation. It was achieved
by a direct approach and observation from the officials of the company.
Structure of questionnaire
The structured questionnaire was divided into different sections as felt suitable. The
first section covers personal variables, which are independent based on the assumption
that there were measurable differences amount the levels with regard to the perception
of dependent variables. The second to study factors section of questionnaire covers the
factors of study with dependent variables viz:
42. 42
Chapter 4
DATA DESCRIPTION& ANALYSIS
1) OUT of 161 respondences more then 85% of respondeancs are earning.
2) Survey most of respondents are teenagers
43. 43
3) Survey shows that among 161 respondents 143 people are aware about UPI
application
5) In the most cases are people get to know about UPI from their friends relative and
the rest of the people get to know from advertisement and social media.
44. 44
6) This survey shows that the Google pay is the most preferred up application among
the people followed by Paytm.
7) The survey show show that paying electricity bill , postpaid prepaid recharge and
insurance are the main reason that people use UPI applications.
45. 45
8) People use UPI app because it's convenience multiple payment method the main
reason they are getting cash back on their transactions.
9) The survey show that majority of respondent are are using up app more than 2 years.
46. 46
10) The majority of respondents still depend on up fund transfer whenever they went
in some shop.
11) Almost 123 respondent have a wallet option in their UPI app example phone
pe and paytm In most of the cases people are getting interest on their money from
wallet.
47. 47
11) In most of the cases people are getting interest on their money from wallet.
12) That's a survey shows that making very e Houston digital payments like everyday.
48. 48
13 ) Most of the respondents are trusting on upi application.
14 ) And people are aware that it is time they pay money by upi application they have
to pay some transaction charges. The transaction charges at different depending on the
amount.
49. 49
15) The upi per transaction limit 10000 rupees and most people are aware about that.
16 ) The major problem face by respondents are
1) there money stuck while pain to someone and sometimes they couldn't able to
transfer money because of technical issues.
2) Most of technical issue which respondents faced unable to login unable to add
different bank account.
50. 50
17) Most of the respondents gave good rating to UPI app because it can be used from
anywhere and anytime.
51. 51
18 )149 respondents are satisfied with the service provided by UPI payment application.
52. 52
SUMMARY & CONCLUSION
Findings
• If you are sending money from UPI application, then receiver should have to register to
UPI application at another end. Otherwise, you cannot able to send money by mobile
number, then you can send money by entering account number and Ifsc code
• Till now UPI supports only for Android users so other users should wait for NPCI for
developing software for other platforms
• UPI is still in starting stage and common problems like server issues are more
• There is no separate customer care line if any problem in payments like payment in
pending and payment is failed but money is not refunded
• UPI is in initial stage, so most of the Banks are adopting this technology and this leads
to problem in maintaining servers 24 hours
• UPI mainly targets the smart phone users and the number of smart phones are increasing
day by day but the Digital literacy is too less. This will affect the UPI
• Till now, there is no transaction charge but for maintaining servers and for other
infrastructure facility Banks may start applying charges
• UPI mainly requires Internet connection but in India Data connection is not available
everywhere
• Single Application for accessing different bank accounts
• Use of Virtual ID is more secure, no credential sharing
• Single click authentication
• Raise Complaint from Mobile App directly
• Seamless fund collection from customers - single identifiers
• No risk of storing customer’s virtual address like in Cards
• Tap customers not having credit/debit cards
• Suitable for e-Com & m-Com transaction
53. 53
• Resolves the COD collection problem
Conclusion
UPI developed the m-payment technology by facilitating mobile phone to be used as a
main payment device for giving and accepting payments. In contrast to all of payment
systems it can be say that UPI is the most advanced payment system in the world.UPI
payment system allows money transfer between any two bank accounts by using a
smart phone. It allows a customer to pay directly from a bank account to different
merchants, both online and offline, without the hassle of typing credit card details,
IFSC code, or net banking/wallet passwords. It aims to simplify and provide a single
interface to money transfers easy, quick and hassle free. These features of UPI
motivates the respondents of service sectors to adopt the tool and the above study
revealed that there also a significant difference found between the gender towards the
adoption of UPI. The use of smart phones, the availability of an online verifiable
identity, universal access to banking and the introduction of biometric sensors in
phones will proactively encourage UPI Transactions and findings revealed that the
respondent have positive attitude towards the UPI transaction for ushering in a less-
cash society in India
Despite all the claims of government, the most preferred mode of payments remain
cash & cards on an average. Although usage digital payments has increased manifolds
by the people in all age groups, but more awareness needs to be spread especially in
field of UPI. The frequency of digital payments is highest in the age groups of 20-35
and least in above 40. People are although aware of UPI but are not as inclined
towards it as they are to mobile wallets and debit/credit cards. The new technology
faces challenges that need to be addressed and taken care of in order to promote it in
future. In case of UPI the front-end platform is to be designed by the banks. If banks
fail to work effectively on this then consumer adoption of UPI will be difficult more
likely because private mobile firms have sincerely invested in creating merchant
network to ensure smooth and failure free payment process. Moreover they have also
included cashbacks and discounts to attract customers atleast but for a trial usage.
54. 54
Already the mobile wallet companies of India have a larger customer base compared
to existing bank supported apps combined. If UPI fails to deliver its promise in
creating a one stop solution for financial payments then banks will loose their revenue
to private fintech companies. The UPI allows consumers to transact directly through
their bank account with a unique UPI identity which syncs to Aadhar’s verification
and connects to the merchant for the settlement and lets the issuing bank to close the
transaction. In a single swipe the transaction is complete without any middlemen (like
Visa and Master Card swich) to facilitate the transaction. This also has been possible
because India is the only country which has been able t register more than one billion
of its population (DNA, 2016) on the identification database called Aadhar. Thus a
robust Aadhar platform is one of India’s superior achievements which will aid the
country to digitalize its payment services through UPI.
• From above study, it is concluded that UPI will definitely change the way we are transacting
now and transforming into digital payments where each person’s smart phone will be
primary device for all payments
• UPI is in initial stage, When UPI is fully operational means when all the banks join the UPI
then it would be wide beneficial for banking sector and customers in terms of sending and
receiving money
• We know that in recent time, there is enormous growth in smart phone users and
penetration of internet in rural services. This leads big potential for adoption of UPI by Indian
customers
• UPI creates convenience of transacting without knowing Bank details means knowing
phone number or virtual address with high security and simple process. From all above
points we can conclude that UPI will gradually end the cash payments and reducing
circulation of currency notes. This will leads to a transparent system and a cash less economy
• Currently India is developing at the rate of 6 to 7%.we know that cashless payment will
definitely reduce or stop the burden of circulating hard cash throughout the nation.
55. 55
Recommendations
1. A very big plus with UPI is that cash sent or received goes directly into a bank
account. In digital wallets such as Paytm, payments and cashbacks stay in the wallet.
Also these typically involve a fee for moving the money to a bank account. This fact
needs to be properly communicated to prospective customers. The more people start
understanding this, more shifts would be seen towards UPI payments.
2. UPI adoption and extensive use for merchant payments needs to be targeted.
According to figures from chief digital officer, YES BANK, there is an ecosystem of
around 40 million merchants in this country who are not using electronic payments.
They need to be targeted. Mobile wallets became successful when small merchants,
tea vendors and kirana (neighbourhood) shopkeepers started accepting them and
similar market targeting should be done for UPI to make it a game changer.
3. The facts and figures from NPCI and the research insights from this research suggest
that more volumes could be generated out of the individual-to-merchant payment
space. This could be for rent payments, bill payments, contributions to chit funds or
mutual funds etc.
4. The initial growth in usage of UPI was mainly being driven by demand that arose post
demonetisation, but to sustain this growth the industry needs to create multiple use-
cases for UPI payments just like digital wallets have managed to score points by
adding multiple use-cases.
5. UPI should come up with bigger value proposition for merchants for example, loyalty
programmes, post-purchase analytics, merchant ratings, systematic savings etc which
will manage to take UPI to the peer to merchant space.
Limitations of Study
Limitations of Study
1) Because of covid its hard to get survey information directly.
57. 57
study of UPI payment system
*Required
1. NAME
2. Email ID
3. INCOME SOURCE *
Mark only one oval. salaried
Business
Employee Other:
4.Age Group *
Mark only one oval.
20 years- 25 years
26 years- 30 years
31 years- 40 years
40 year above
5. Are you useing UPI app ?
Mark only one oval.
YES
NO
6. Are you aware of UPI ? * Mark only one oval.
FULLY AWARE
UNAWARE
7. How did you get to know about UPI * Mark only one oval.
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Friends and relatives
Social media Other:
8. What’s your preferred UPI payment app ? *
58. 58
9. For which services you use these apps? *
10. Why do you prefer paying through these payment apps? *
Tick all that apply.
CONVENIENCE
CASH BACK
MUTIPAL PAYMENT METHODS
BETTER USER EXPERIENCE
11. SINCE HOW LONG ARE YOU USING UPI APPS ? *
Mark only one oval.
1 YEAR
2 YEAR
6 MONTHS
12. Which mode of payment/funds transfer do you prefer the most ? *
Mark only one oval.
CASH
DIGITAL WALLETS
NEFT/RTGS
UPI
13. Does your UPI app have a wallet option ? *
Mark only one oval.
59. 59
YES
NO
14. Does your wallet give you interest on keeping money in it ? *
Mark only one oval.
YES
NO
NOT AWARE
15. How often do you need to make digital payments ? *
Mark only one oval.
VERY OFTEN
OFTEN
SOMETIMES
RARELY
NEVER
16. Do you think UPI payment is safe ? *
Mark only one oval.
YES
NO
17. If no why ?
18. Are you aware about of UPI transaction charges ? *
Mark only one oval.
YES
NO
19. Are you aware that UPI transaction limit is 10K (per transaction) ? *
Mark only one oval.
YES
NO
20. What kind of problem you faced in UPI application ? *
60. 60
21. UPI Provides flexibility and easy tracking of spending. ( plz rate ) *
Mark only one oval.
1
2
3
4
5
22. Are you satisficed by the service provide by UPI ? *
Mark only one oval.
YES
NO
23. IF no why
24. Any suggestion
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