RBI governor Shaktikanta Das made three big proposals for the digital industry in his monetary policy speech today. The RBI proposed to launch UPI-based payment products for feature phones as well as a ‘on-device’ wallet in UPI applications which will simplify the process for small value transactions. Feature phones, unlike smart phones, have basic functionalities that provide limited access to digital payment methods.
The governor also proposed to enhance the UPI transaction limits for the Retail Direct Scheme for investment in G-secs and Initial Public Offering (IPO) applications from Rs 2 lakh to Rs 5 lakh.
According to Bipin Preet Singh, managing director, co-founder, and CEO, MobiKwik, the proposal to launch UPI-based products for feature phones will widen the horizon of financial inclusion in India. "It is a gamechanger of sorts for the common man in India who can now be eligible for other financial services such as Buy Now Pay Later, Digital Insurance, Small Ticket loans as well," he said.
UPI is the single largest retail payment system in the country in terms of volume of transactions, indicating its wide acceptance, particularly for small value payments. In November 2021 alone, 4.1 billion transactions worth Rs 6.68 lakh crore were carried out by UPI. As per the Annual Report of the Microfinance Institutions Network (MFIN), a trade body for the microfinance industry, the proportion of UPI transactions in total volume of digital transactions grew from 23% in 2018-19 to 51% in 2020-21.
UPI has evolved as a simpler payment solution for regular recurring investments as well. Adhil Shetty, CEO, BankBazaar, says that today you can invest in everything from mutual funds to term and health insurance to even cryptocurrencies via UPI. "RBI is doing its bit to support this by facilitating its use while investing in the Retail Direct Scheme and IPO applications."
The moves will not only benefit users in terms of flexibility and convenience but also bring more small merchants into the digital economy, says Ankit Bhatnagar, head of Product, Mswipe. Additionally, he says, RBI’s decision on forming a panel to study digital payments charges will mitigate the concerns of customers and bring in more transparency and regulation in the system. As per data from Mswipe, their merchants clocked transactions worth Rs 810 crore via UPI in September 2021, a significant increase over the year from Rs 132 crore in October 2020.
Shetty adds that the RBI's proposed UPI- based payment products will be especially handy in places where internet connectivity continues to be an issue. "Enabling UPI on feature phones will increase digital penetration of financial services and help a large segment of people without access to smartphones or reliable internet services to transact digitally," he says.