UPI the hour is to create new use-cases. Though

UPI is being used for fund transfer,
e-commerce purchases, taxi service payment, utility bill payments and so on. For
sustained growth of UPI, need of the hour is to create new use-cases. Though
NPCI doesn’t classify UPI transactions between peer-to-peer and merchant
transactions, many companies in the digital payment space have reported that
share of merchant transactions on their platforms is very less. Hence, there is
huge growth potential for UPI in merchant space. Some players are already ahead
of the race. Phonepe reported that
after integration of UPI on its platform, nearly 70% of the merchant
transactions on its platform were carried out through UPI.  Paytm
has 5 million merchants on its platform, getting them on-boarded on to UPI will
boost UPI growth further. Furthermore, for providing greater ease to
users, wallets and bank accounts can be made interoperable. Experts in the
industry say that interoperability between different wallets is also
inevitable.

There are about 40 million merchants
in India, who are still not part of digital payment ecosystem. Small retailers
have been left out of this ecosystem as the only medium available for
electronic payments so far over the years was debit or credit cards. It is not
viable for small retail stores to deploy point-of-sales machine as it is costly
to install, involves paperwork and internet connection and steep commission is
charged by banks on each transaction. They need to be encouraged to use
UPI-based systems. Even the retailers who are currently using point-of-sales
machines, their transaction cost will reduce as fee charged by UPI is much
lesser. The challenge lies in shifting people from using debit/credit cards to
UPI-based system.

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Various
players in digital payments place have been taking efforts to drive people to
make digital payment transactions. When a company comes up with a product that
is completely new and is not part of customers’ daily routine, it is difficult
for it to sell that product. This is because it is difficult to inculcate new
habits into the customers. Similarly, in a country like India where people are
so used to cash transactions, to make them shift to digital payments, it is
necessary to give them incentives. Hence, these platforms have been providing
customers cashback and other such rewards. Although for short period of time, rollout
of demonetization acted as an added incentive. The trend observed in 2017 in
digital payment ecosystem is likely to continue in 2018 with sector’s immense
potential, increased government support and the emergence of new players. For
UPI, with all its benefits over other modes of payment and upcoming enhanced
version, the growth is surely going to be exponential.