The document discusses the Unified Payments Interface (UPI) launched by the National Payments Corporation of India. UPI allows for instant fund transfers between bank accounts using just a virtual payment address. It provides a simple, secure and cost-effective payment solution. Key benefits of UPI include ease of use where users don't need bank details, two-factor authentication for security, and lower costs for banks. The document also discusses examples of how UPI works for e-commerce payments, money transfers to family, and its growth drivers like scalability and adoption.

1. Trends in Banking
(Part-VII)

2. National Payment Corporation of India launched
Unified Payment Interface
(Next future payment interface)

3. What is Unified Payment Interface(UPI)?
UPI, a product of NPCI is
a revolution in retail
payment system allows for
instantaneous fund transfer
via a SMARTPHONE
using single-click & 2-
factor authentication
The UPI platform can be
used for
- e-commerce transactions
-Fund transfer to family
-Purchase of train tickets
-over-the-counter
payments
-donations
-school fees among others
UPI provides an
enhanced layer of
security, i.e, customers
won’t have to share
bank account details
only a virtual payment
address provided by a
bank or an Aadhaar
number(which is tied to
a bank account)

4. How UPI Platform works?
1.Mr.X finds a leather
sofa on a e-commerce
portal that cost
Rs.20,000
2.During check-out,
Mr.X provides his
virtual payment
address given by his
bank
(x.444@hdfc)
4.UPI routes request
to Mr.X ‘s virtual
payment address
through his bank
5.Mr.X’s bank notifies
him of ‘collect request’
from vendor. Mr.X
confirms it & proves
his credentials
3.E-commerce portal
initiates “collect
request” for Rs.20,000
along with order number
to UPI via its bank
6.Mr.X’s bank Debits the
amount & confirm it to
UPI which alerts e-
commerce vendors bank.
Vendor gets confirmation of
credit & initiates delivery of
order
In e-Commerce txns

5. 1.Ram, a migrant worker living in Mumbai wants to send money to his wife,
Lakshmi in the village
2.Ram creates SBI bank account using Aadhaar e-KYC option links it to his mobile
number
3.Lakshmi opens an account in Bank of India using Aadhaar e-KYC
Ram sets up profile on SMI mobile app &
integrates with UPI
In the same way Lakshmi does the same
with her bank account
SBI App validates user,
Debits Ram’s account,
initiates “Pay”
transaction to Lakshmi’s
Aadhaar Number
UPI maps Aadhaar
Number to Bank
Identification number &
routes transaction to
destination bank
Ram adds Lakshmi’s
Aadhaar number to his
address book(no other
information needed) &
enters the amount with a
single click & the money is
sent
Destination bank credits
amount to Aadhaar-linked
Account, sends
confirmation to UPI which
in turns confirms credit to
SBI app that notifies Ram
Fund Transfer
to family

6. Key Drivers of UPI
Simplicity
An account holder will be able to send & receive money from
their mobile phone with just an identifier without having any
other bank/account details
All that a account holder need to do is “Pay to” or “Collect
from” a payment address(such as Aadhaar number, Mobile
number, RuPay Card, virtual payment address etc)
Adoption
The main objective of UPI was
to have a solution that is
scalable to a billion users &
enable large scale adoption
Security
This is one of the key areas of
concern among users. The
concept behind UPI is not to
reveal too much data like
banking or other personal
details. The solution is 1-
click 2-Factor authentication
Cost
In UPI since mobile phone number is
used as an authentication(credential
capture) device, use of virtual
payment addresses & use of third
party portable authentication schemes
such as Aadhaar should allow bank’s
cost to be driven down
Innovation
UPI is an innovation on both ‘payee’ & payer
side.UPI App will allow application providers to;
-take advantage of enhancements in mobile
devices
-integrated payments on new consumer devices
-innovative user interface features
-take advantage of newer authentication services

7. Objectives of introducing UPI
1.to facilitate next generation online immediate
payments leveraging trends such as;
-increasing smart phone adoption
-Indian language interface
-universal access to internet & data
2.The payments can be both sender & receiver
initiated & will be carried out in a secure, convenient
& integrated fashion
Who can use UPI?
Anyone with a mobile
phone & a bank
account
How is UPI different from the
existing payment system?
In the present system, in order to
make any txns the account holder’s
bank bank account details are
required but in case of UPI all one
needs is a virtual address which is
unique to you
What is the level of security in UPI?
Single Click 2-Fctor authentication(with
one click the txn is authenticated at two
levels)
User just needs a mobile phone with a
mobile PIN called MPIN & a virtual ID
offered by the provider
Is virtual address unique to the user?
Virtual address offered by the provider need not be permanent.
For instance: a provider may offer “one-time use” addresses or “amount/time
limited” addresses to customers. In addition, innovative usage of virtual
addresses such as “limit to specific payees”(ex: a virtual address that is white
listed only for txn from IRCTC)
-PSP’s can allow their customers to create any no. of virtual payment addresses
& allow attaching various authorization rules to them

8. Level of security in UPI-Case Study
1.You have bought some
goods at a mall & need to
make a payment for it
2.You have to inform your virtual
address to the person at the counter
who enters the address in his/her
system & the malls system will then
send you an authentication message
to your virtual address which is
mapped to your mobile
3.Only after receiving the
message & acknowledging
it by entering your
“password” is the txn
completed & the amount
Debited from your bank
account
UPI has a single-click two-factor authentication system which means that
with one click the txn is authenticated at 2 levels

9. Banks must exploit the situation
(Its brave new world of Apps, big data, analytics, robotics & more)

10. There are powerful new tools at Bankers disposal such as
better use of big data & analysis.
According to Accenture’s Tech Vision, by 2020 there will
be more than 44 zettabytes of data,35% of which will be
considered useful for analysis
Companies are increasingly using
“Intelligent Automation” to handle big
data-machines to create scale, speed &
the agility to cut-through complexities
that humans cant duplicate

11. India’s banks also need to be focused on
more than just offering online & mobile
deposits, payments & loans. They should be
going one-step further thinking outside the
box just as vehicle –hailing app companies
have done
Discount brokers are already using “robotics”
to expand their customer base. In 2015,Honk
Kong based brokerage ‘8 Securities’ launched a
robo-advisor called “8 Now” available in Hong
Kong & Japan taregeting retail investors with a
minimum $ 88 initial investment
India’s banks need to continue to build their
basic digital services but they also need to start
leveraging intelligent automation & new
technologies such as block-chain. This would
be good for customers(offers them faster &
better service),good for the banks(expands their
coverage) & its cheaper for everyone
Robotics is a prime example. Rob-advice may so far have
only gained a miniscule share of Assets Under
Management(AUM) globally but it presents investors
with a possible price reduction of as much as 70% for
some services & it presents banks with new avenues to
streamline & improve services
Robotics doesn’t take away the human
element-you will still need the advisor to
reassure clients through difficult markets
,persuade clients to take action & synthesize
different solutions but it potentially
increases the output of the bankers
Finally its all about figuring out how
robo-advice can complement &
enhance relationships

12. India world’s largest recipient of remittances
in 2015
(World Bank)

14. India has remained the world’s largest recipient of remittances from abroad in 2015,despite
a $ 1 billion drop from 2014,the first such decline since 2009 according to World
Bank).The World Bank attributed the decline to the impact of falling oil prices on
remittances from the Gulf countries & depreciation of major sending country currencies. In
2015,the country got $ 69 billion in remittances
Officially recorded
remittances to
developing
countries
amounted to $
431.6 Bn in
2015(increase of
0.4%over 2014)
The growth pace in
2015 was the from
slowest since the
Global Financial
Crisis
Global remittances
which include
those to high-
income countries
contracted by 1.7%
to $ 581.6 Bn in
2015 from & 592
Bn in 2014
Remittances to India constituted 2.9 times the FDI in 2014.This declined to
1.75% of FDI in 2015.Other large remittance recipients in 2015 were;
China ($ 63.9 Bn),
Philippines($ 29.7 Bn),
Mexico($ 25.7 Bn),
France($ 24.6 Bn) &
Nigeria($ 21 Bn)
Remittances are an
important & fairly stable
source of income for
millions of families & of
foreign exchange to many
developing countries
If remittances continue to
slow & dramatically as the
case of Central Asian
Countries, poor families in
many parts of the world face
serious challenges including
nutrition, access to health
care & education
Remittances to Nepal rose dramatically in response to
the massive earthquake there by 20.9% in 2015 V/s
3.2% in 2014.Also many migrant workers returned to
take car of their families as the avg. no.of returns at
the airport jumped 5 times to around 4,000 per day.
The growth of remittances in
2015 slowed from 8% in
2014 to 2.5% for
Bangladesh, from 16.7% to
12.8% for Pakistan & from
9.6% to 0.5% for Srilanka
Besides oil price slide,
depreciation of major
sending country
currencies vis-à-vis the
US Dollar might be
playing a role

16. Migrants from India are
largely concentrated in
-UAE(2.3 Million)
-US(2.1 Million)
-Saudi Arabia(2 Million)
&
-Pakistan(1.4 Million)
The 4 countries
along with the
Kuwait & Qatar
account for roughly
69% of total
remittance flows
into India
The UAE leads the pack
with transfers through
this corridor ($ 13.2 Bn)
followed closely by the
-US($ 11.5 Bn)
-Saudi Arabia($11 Bn)
-Pakistan($ 4.9 Bn)
-Kuwait($ 4.8 Bn) &
-Qatar($ 4.2 Bn)
The top migrant
destination is the US
followed by Saudi Arabia,
Germany, Russia, UAE,
UK,France,Canada,Spain
& Australia
India is the top emigration
country with 13.9 Million
emigrants followed by
Mexico at 13.2 Million &
Russia at 10.9 Million

17. The US tops the list with an estimated $ 56.3 Billion in
outflows in 2014,Saudi Arabia rank the second followed
by Russia, Switzerland, Germany, UAE & Kuwait

18. Thousands plan Savings Account for a Holiday
(Thomas Cook is allowing passengers to open a separate account for
their big vacation a year later for which they will attract interest as well
as a top-up from Thomas Cook)

19. Thousands of people have
opened “Holiday Savings
Account” with different banks
in the last one year to go on
vacation with Thomas Cook
Not everyone is able to fork out
money at a time to go on a
holiday & is becoming a
necessity for increasing number
of people. Hence Thomas Cook
came up with inflation-proof
holiday packages that can be
used after 13 months
Thomas Cook has succeeded in
opening accounts with a total of
18,000 passengers. The no.
of accounts would be smaller as
an account usually means
multiple travelers of one family
or a group
If any banks are keen to
partner with Thomas Cook,
they are welcome.
Thomas Cook has
also set-up a Call
Centre to push sales &
promote the concept
Thomas Cook has partnered
with banks like ICICI, SBI,
Kotak Mahindra & IndusInd
Bank to attract holiday lovers

20. How the Thomas Cook’s Holiday Savings Account work?
(A Recurring Deposit plan linked to Holiday Plan)
The cost of the
holiday is split into 13
installments but the
account holder is
required to pay the
first 12 months
installments only
The 13th installments
comes from the
interest earned from
the account & a top-
up from Thomas
Cook
If the account holder
changes his mind/decides
not to go on a holiday at
the end of 12 months, the
money & interest can
will be returned back to
the account holder
The Holiday package
is all inclusive &
takes care of return
airfare, transfers,
accommodation, all
meals, sightseeing &
taxes
What happens is the cost of one
or more component of the rip
goes up due to increase in
airfare/FOREX rate?
Thomas Cook takes the risk of
any increase & hence it is
called inflation-proof package

21. Anup George Rebello
Asst.Manager
The Catholic Syrian Bank Ltd
(anuprebello.6@gmail.com)
http://www.slideshare.net/anuppresentations