UPI

DIGITAL EMPOWERMENT
A PROJECT REPORT SUBMITTED FOR PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE DEGREE OF

B.A. POLITICAL SCIENCE (HONS)

SUBMITTED BY

(MADHUR GUPTA)

Roll No. – 22PSA020

Dyal Singh Evening College

University of Delhi

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 CERTIFICATE BY THE TEACHER

This is to certify that Mr. MADHUR GUPTA of B.A. POLITICAL

SCIENCE (HONS) has carried out the work on the oriented

dissertation project tittle Study of UPI payment system under my

guidance in partial fulfillment of requirement for the completion of

prescribed by the Dyal Singh Evening College.

The project report is the record of authentic work carried by him.

Signature of Teacher

Pradeep Sir

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 Acknowledgement

This project has been great learning experience for me. I take this opportunity

Pradeep sir 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 for giving the opportunity to work on the

projects and broaden my knowledge and experience.

I would like to thank all the professors and the staff who were helpful in providing

books and articles II 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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 TABLE OF CONTENTS

Contents Page No.

CHAPTER 1: INTRODUCTION 5 to 14
CHAPTER 2: OBJECTIVE OF THE STUDY 15 to 18
CHAPTER 3: RELEVANCE OF THE STUDY 19 to 26
CHAPTER 4: CONCLUSION 27 to 29
Questionnaire 30 to 33
REFERENCES 34 to 36

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 CHAPTER 1

INTRODUCTION

Unified Payments Interface (UPI) is an instant real-time payment system developed National
Payment Corporation of India (NPCI). The interface facilitates inter-bank peer to peer (P2P) and
person-to-merchant (P2M) transactions. It is used on mobile devices to instantly transfer funds
between two bank accounts. The mobile number on the device is required to be registered with the
bank. The UPI ID of the recipient can be used to transfer money. It runs as an open source Application
Programming Interface (API) on top of Immediate Payment Service (IMPS), and is regulated by
the Reserve Bank of India (RBI).

As of September 2022, there were 358 banks available on the platform with a monthly volume of 6.7
billion transactions amounting to ₹11.16 trillion (US$140 billion).

As of May 2021, the platform has over 100 million monthly active users in India. The proportion of
UPI transactions in total volume of digital transactions grew from 23% in 2018–19 to 55% in 2020–
21 with an average value of ₹1,849 per transaction. Digital transactions worth ₹8.31 trillion were
made via the platform in January 2022. In FY 2021–22, the value of transactions crossed $1 trillion.

In April 2009, National Payment Corporation of India (NPCI) was formed to integrate all the payment
mechanisms in India and make them uniform for all retail payments. By March 2011, RBI found out
that in India, only six non-cash transactions happen every year by an individual citizen while 10
million retailers accepted card-based payment. Around 145 million families have no access to any
form of banking. There is also the problem of tackling black money and corruption that happens
mostly in cash.

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RBI in 2012 released a vision statement for a period of four years that indicated commitment towards
building a safe, efficient, accessible, inclusive, interoperable and authorized payment and settlement
system in India. It is part of the Green Initiative to decrease the usage of paper in domestic payments
market. UPI was officially launched in 2016 for public use.

Under RBI guidance, NPCI became the primary body tasked with developing a new payment system
that is simple, secure, and interoperable. UPI works on four pillar push-pull interoperable model
where there will be remitter/beneficiary front end PSP (payment service provider) and
remitter/beneficiary back end bank that settles the monetary transaction for the users. According to
CEO of netmagic solution , UPI became one of the most successful deep-tech innovation.

In December 2019], noting the success of UPI, Google suggested federal solution Board to follow
UPI as example in developing FedNow, a real-time payment system for United State.

With exponential growth of UPI, India became the world's largest real-time payment market with
25.50 billion annual transactions in 2020 per data from ACI Worldwide and Global Data, ahead of
China and United States.

As per the Economist Intelligence Unit Report 2021, UPI made India a leader in global real-time
payment market followed by China and South Korea. After the decision of Ministry of Finance to
nullify Merchnat Discount Rate (MDR) in 2019 from UPI, the number of low value transactions
skyrocketed making huge gains on real-time transaction volume data. Nations such
as Brazil, Bahrain, Saudi Arabia, Singapore, United States and European Union are now trying to
emulate the success of UPI in their own market.

From January 1, 2019, UPI became a popular payment option for Initial Public Offering (IPOs). The
transaction limit was enhanced from ₹100,000 to ₹200,000 in March 2020. From December 2021,
RBI again increased the limit to ₹500,000 for Retail Direct Scheme and IPO applications. To make
UPI economically feasible for payment companies, RBI is considering Merchnat Discount
Rate (MDR) on future UPI transactions. In its first monetary policy for financial year 2022–23, RBI
proposed cardless cash withdrawal facility from ATM using UPI based QR code. In partnership with
NSDL Payments Bank and NPCI, ToneTag launched VoiceSE which will enable 400 million feature
phone users to make UPI payment using voice in Hindi, Tamil, Telugu, Malayalam, Kannada, and
Bengali languages.

On 16 August 2018, UPI 2.0 was launched which enabled users to link their overdraft accounts to a
UPI handle. Users were also able to pre-authorise transactions by issuing a mandate for specific
merchant. This version also included a feature to view and store the invoice for the transactions. An
AutoPay facility for recurring payments was also added. As of August 2021, State Bank Of
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India, Bank of Baroda and Paytm Payment Bank are live on UPI AutoPay each registering 660,000,
204,000, and 186,000 mandates, respectively. From 15 March 2022, Government removed the need
of debit card for UPI registration. NPCI is planning to expand AutoPay to international markets and
operationalize real-time payment dispute resolution mechanism covering 90% of the complaints by
September 2022.

From 8 June 2022, RBI allowed linking RuPay credit card with UPI. Customers can now make credit
card payments using UPI, in the absence of a physical card. NPCI is working on a real-time feature
that will reduce the 24 hours time period taken by banks to unblock funds over time-out or transaction
decline to 30 seconds. The service was officially launched on 20 September 2022. On 7 December
2022, RBI announced that UPI will upgrade from single-block-single to single-block-multiple debit
for recurring transactions and investments in securities. The feature will help the user block funds for
specific purpose and release it when needed

As part of financial inclusion initiative, NPCI with fintech Start-up Naffa Innovations with their
product ToneTag in 2021 started working on developing a voice-based payment service for feature
phone users in low connectivity zones over UPI payment ecosystem under Interactive Voice
Response (IVR) project. The system will use Dual Tone Multi-Frequency (DTMF) signalling
technology with two factor authentication (2FA) flow for peer-to-peer (P2P) transaction. From
September 2020 to June 2021, it was under beta testing while awaiting RBI approval for large scale

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deployment. The beta testing and pilot experiment was completed by October 2021 and RBI started
formulating guidelines for nationwide use.

RBI governor, Saktikanta Das launched the service called UPI 123PAY on 8 March 2022, with an
aim to help almost 400 million feature phone users in the country. Till now, UPI payments were only
possible through payment applications on smartphones and USSD -based service for feature phone.
But as per deputy governor T Rabi Shankar the latter has been found to be cumbersome due to the
unavailability of the services on several mobile networks.

UPI 123PAY has four options for payment.

1. App based functionality where a mobile phone manufacturer can install UPI app
through over-the-air programming, that can be used for payment.
2. Missed called based in which customer can use dedicated merchant payment number
by giving a missed call. The incoming authentication call will ask for PIN verification
to complete the transaction.
3. Interactive Voice Response (IVR) based where the payment transaction will complete
using pre-defined phone numbers.
4. Payment in offline mode through sound based proximity data communication.

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As per NPCI, some of the early use cases involve FASTag recharges, insurance payments, and EMI
collections. As of 20 September 2022, Ultracash Technologies in collaboration with Bharat
Petroleum helped 200,000 active users make LPG booking and payment through UPI 123PAY.

Youngsters has a special concern about technology. The Government of India has been taking several
measures to promote and encourage digital payments in the country. As part of the „Digital India‟
campaign, the government aims to create a „digitally empowered‟ economy that is „Faceless,
Paperless, and Cashless‟. There are various types and modes of digital payments. Some of these
include the use of debit/credit cards, internet banking, mobile wallets, digital payment apps, Unified
Payments Interface (UPI) service, Unstructured Supplementary Service. Digital payment methods are
often easy to make, more convenient and provide customers the flexibility to make payments from
anywhere and at any time. These are a good alternative to traditional methods of payment and speeded
up transaction cycles. Post demonetization, people slowly started embracing digital payments and
even small time merchants and shop owners started accepting payments through the digital mode.
Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile
application (of any participating bank), merging several banking features, seamless fund routing &
merchant payments into one hood. It also caters to the “Peer to Peer” collect request which can be
scheduled and paid as per requirement and convenience. Each Bank provides its own UPI App for
Android, Windows and iOS mobile platform(s).The advanced cloud computing features provide the
youth a flexible and an easy usable platform for resource sharing, information storage and for world-
wide interactions. This facility is facelifted by National Payments Corporation of India (NPCI).
National Payments Corporation of India (NPCI) is an umbrella organisation for operating retail
payments and settlement systems in India, it is an initiative of Reserve Bank of India (RBI) and Indian
Banks' Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007,
for creating a robust Payment and Settlement Infrastructure in India.Considering the utility nature of
the objects of NPCI, it has been incorporated as a "Not for Profit Company under the provisions of
Section 25 of Companies Act 1956 (now Section 8 of Companies Act 2013), with an intention to
provide infrastructure to entire banking system in India for physical as well as electronic payment
and settlement systems. The Company is focused on bringing innovations in the retail payment
systems through the use of technology for achieving greater efficiency in operations and widening
the reach of payment systems. NPCI during its journey for last six years, has made a significant impact
on the retail payment systems in the country. Dedicated to the nation by Shri Pranab Mukherjee,
endorsed by the Prime Minister, Shri Narendra Modi and later made the card of choice for the
ambitious Pradhan Mantri Jan DhanYojana, RuPay is now a known name. With Immediate Payment
Service (IMPS), India has become the leading country in the world in real time payments in retail
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sector. National Financial Switch (NFS) and Cheque Truncation System (CTS) continues to be the
flagship products of NPCI. Unified Payments Interface (UPI) and Bharat Interface for Money
(BHIM) has been termed as the revolutionary products in the payment system. Bharat Bill Payment
System (BBPS) has also been launched in pilot mode. The other products in pipeline include RuPay
Credit Card, National Common Mobility Card - Tap & Go and Electronic Toll Collection. Pioneered
and developed by National Payments Corporation of India (NPCI), BHIM has been conceived and
launched by the Hon'ble Prime Minister of India, Narendra Modi on 30th December 2016 to bring in
Financial Inclusion to the nation and a digitally empowered society.Bharat Interface for Money
(BHIM) is a payment app that lets you make simple, easy and quick transactions using Unified
Payments Interface (UPI). You can make direct bank payments to anyone on UPI using their UPI ID
or scanning their QR with the BHIM app. You can also request money through the app from a UPI
ID.

Prerequisites to start the service

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• Bank a/c

• Mobile number should be linked with bank a/c

• Smart Phone with internet facility

• Debit Card for re-setting MPIN.

Activation of Service

• Download the App for UPI

• Automated mobile number verification

• Do registration online on the App with a/c details

• Create a virtual ID

• Set MPIN

Prerequisites for Transaction

• Self Service Mode with Smartphone with internet facility

• Registered device only

• Use registered MPIN

Transaction Cost

• NIL to customer by most Banks

• Customer pays for data charges

• The transaction costs are based on available information and may vary based on banks

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Services Offered

• Balance Enquiry

• Transaction History

• Send / Pay Money

• Virtual Address

• A/c no. & IFSC code

• Mobile no. and MMID

• Aadhaar (to be made functional)

• Collect Money - on Virtual Address

• Add bank account

• Change / Set MPIN

• Notifications

• A/c Management

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Literature Review

K. Suma Vally and K. HemaDivya.(2018) in the Paper “A study on digital payments in India with
perspective of consumers Adoption” conclude that the deployment of technology for digital payments
have improved the performance of banking sector and able to achieve the motive cash less country.
This study also give emphasis to the percentage of awareness on maximum utilization of technology.
Banks should take effective measure in creating awareness towards the effective usage technology
and security.

Rahul Gochhwal (2017) in his paper “Unified Payment Interface—An Advancementin Payment
Systems” concluded that UPI has enabled mobile phone to be used as a primary payment device for
makingand accepting payments. UPI leverages high teledensity in India to enableevery bank account
holder to make digital transactions using a mobile phone.India, which has a poor merchant payment

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acceptance infrastructure UPI,enables even the smallest merchant to start accepting digital payments
withoutthe need for any POS machine.

Anjali R, Suresh A (2019) in the paper ”A Study on Customer Satisfaction of Bharat Interface for
Money (BHIM)” stated that BHIM application is one of the best move by the government of India
for instant bank to bank transaction and it is being accepted and loved by a large number of people in
India.

Dr.VirshreeTungare (2018) in his research paper “A Study on Customer Insight Towards UPI
(Unified Payment Interface) - An Advancement of Mobile Payment System” described that 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 moneytransfer between any two bank accounts by using a
smartphone. It allows a customer to pay directly from a bankaccount 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 andprovide a single interface to money transfers easy, quick andhassle
free. These features of UPI motivates the respondentsof service sectors to adopt the tool and the above
studyrevealed that there also a significant difference foundbetween the gender towards the adoption
of UPI.

Sanghita Roy, Dr.Indrajit Sinha (2014) . stated that Epayment system in India, has shown tremendous
growth, but still there has lot to be done to increase its usage. Still 90% of the transactions are cash
based. Technology Acceptance Model used for the purpose of study. They found Innovation,
incentive, customer convenience and legal frameworkare the four factors which contribute to
strengthen the E-payment system.

E-payment systems are important mechanisms used by individual and organizations as a secured and
convenient way of making payments over the internet and at the same time a gateway to technological
advancement in the field of world economy (Slozko&Pello, 2015).

Rakesh H M & Ramya T J (2014) in their research paper titled “A Study on Factors Influencing
Consumer Adoption of Internet Banking in India” tried to examine the factors that influence internet
banking adoption. It is found that internet banking is influenced by its perceived reliability, Perceived
ease of use and Perceived usefulness. In the process of internet banking services expert should
emphasize the benefits its adoption provides and awareness can also be improved to attract
consumers‟ attention to internet banking services.

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 CHAPTER 2

OBJECTIVE OF THE STUDY

1) To know the awareness and use of UPI/BHIM services in students of Delhi.

2) To know which UPI/BHIM APPs are commonly used by students.

3) To analyze the awareness of UPI Payments services towards merchants.

4) To know the awareness of UPI/BHIM payment system 200 students were selected from Delhi city.
The gender wise response were received as per Chart 1.

As per Chart 1it is observed 47% of female students and 53%male students were participated in the
study having basic knowledge of smart phones. There is marginal difference between the gender
ration for basic knowledge of smart phones.

The students were divided into 5 age groups as per chart 2 from age 18 to 28.

The UPI/BHIM app users are categorised based on the use of Apps transaction as per chat 3 given
below.
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As per chart 3 it is found that the students are mostly using 3 rd party App for UPI payments like
PhonePe, Paytm, Aamzon Pay, Google Pay, etc. The reason for the use of 3rd party app for UPI is
the cashback and other cashback related offers offered by the 3rd party app providers and the
advertisement by them.

The transaction amount and ease of use is also plays an important role to select UPI/BHIM for
transaction as per the chart 4.

As per chart 4 it is observed that 80 % UPI/BHIM users transact from ₹ 1/- to ₹ 10,000/- while only
20 % are using it for transaction above ₹ 10,000/- using various UPI/BHIM Apps.

There are various feature available with UPI/BHIM. The chart 5 shows the feature of UPI/BHIM and
its use.

As per chart 5 it is observed that Scan & Pay feature is popular then Send Money feature and Request
Money feature is least used. It is also important the students are checking balance on regular interval
using UPI/BHIM App. There are various UPI/BHIM Apps issued by banks and 3rd party like
PhonePe, Paytm, Aamzon Pay, Google Pay, etc. used by students. The Chart 6 show the popular apps
used by students.

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As per chart 6 it is observed that 3rd Party Apps are mostly used by students than that of native
UPI/BHIM App. The PhonePe is the most popular 3rd party app among others due to quick
settlements. It is also observed that due to cashback, related offers and advertisement are playing
important role while selecting the UPI/BHIM App for transaction. It is also observed that students
are having more than one UPI/BHIM App install on the smartphone.

Limitation of the Study

1) Only students from age 18-28 were selected for the study.

2) Geographic data from Aurangabad city were selected for the study.

3) Only UPI/BHIM option was considered for this paper

Findings of the Study

1) It is found that there is marginal difference between the gender ration for basic knowledge of smart
phones.

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2) It is also observed that students using UPI/BHIM but they are known by third party Apps.

3) It is found that students are passionate real-time payments and its settlement in bank account.

4) It is also observed that students are commonly use UPI/BHIM for ₹1 to ₹ 10,000/- payments.

5) The researcher reveals that the most commonly used UPI/BHIM App are the 3rd Party Apps like
PhonePe.

The objective of the Unified Payment Interface (UPI) in India is to provide a real-time, inter-bank
electronic fund transfer service through a mobile phone. It aims to make transactions between
different banks seamless and convenient, reducing the need for multiple usernames, passwords and
bank account numbers. The main objectives of UPI are to simplify the money transfer process,
increase financial inclusion, and promote a cashless economy.

UPI Payments is a digital exchange service between a customer and a seller/merchant. Today the UPI
Payments services is playing a big role in digital exchange market. From small-scale retailer to large
scale industries, everywhere UPI Payments service is used. Even though, it is beneficial to both
customer and merchant, there are some drawbacks in this system of payments towards merchants.

This payment system is time consuming and cashless. But still some cash payments are being taken
place. There is a risk of online fraud and scam, low internet bandwidth, during the payments receiving
from customers. There is a limitation of income tax for the UPI payments which a merchant has to
face. The merchant has to withdraw money from the bank for all the UPI payment transactions. The
aim of this study is to cover the usage and drawbacks of UPI Payments services and further
improvements to be made in the UPI Payments services towards merchants.

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 CHAPTER 3
RELEVANCE OF THE STUDY

The relevance of studying UPI (Unified Payments Interface) depends on the context and the purpose
of the study. However, here are a few reasons why studying UPI may be relevant:

Financial Inclusion: UPI is a major step towards financial inclusion in India as it provides a platform
for quick, secure, and cost-effective money transfers and payments.

Digital Transactions: With the rise of digital transactions, UPI has become a crucial tool for
facilitating digital payments in India.

Technical Aspects: Studying UPI can provide insights into the technical aspects of digital payment
systems, including security, interoperability, and scalability.

Impact on Financial Industry: UPI has the potential to transform the financial industry in India and
studying its impact on the industry can provide valuable insights.

Future of Payments: UPI is considered as the future of payments in India, and studying its
development and progress can help to understand the direction that digital payments are heading.

While UPI may have changed the face of digital payments in India, empowering people at the
grassroots, the story was not always as such. The economy had run on some form of physical barter
or money system since time immemorial. As payment evolved from barter to gold, to metal coins, to
paper notes and digital money, so did our societal structures—from an era of equality to extreme
disparity. India is a nation of skewed economic extremes where 1% of the population holds over 50%
of its wealth. As the payment systems evolved, the urban and middle class kept pace, but the vast
rural and low-income population struggled with financial inclusion.

The urban Indian population adopted new-age tech in communication, banking, finance, and
medicine, in stark contrast to their rural counterparts, who struggled for necessities owing to a porous
supply chain.

This unintended financial exclusion posed a significant challenge for the government, as without
democratizing access to digital payments, economic growth was impossible. Yet, in 2014, only over
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half (53%) of India’s adults had bank accounts. Another challenge was that most of the population
did not have the digital identity necessary to open an account, proving to be the proverbial chicken
and egg situation.

Enter the JAM Initiative. Short for Jan Dhan-Aadhaar-Mobile, the program is an Indian government
initiative to link Jan Dhan accounts, mobile numbers, and Aadhaar cards.

The JAM troika was primarily intended to be used to implement one of the most extensive reforms
in independent India—that of direct subsidy transfers to the poor. As the first pillar, it was vital to
bring the unbanked population into the banking system. For this, the Prime Minister’s Jan Dhan
Yojana (PMJDY) proved to be a significant achievement helping open accounts for 80%+ Indian
adults. As a second step, Aadhar (Indian national identity program) was made mandatory for opening
a bank account, ensuring a digital identity for all Indians. And the third pillar was digital inclusion
and mobile penetration, the primary instrument to transact digital payments. Today, India has
a teledensity of 65%, with 65% of smartphone users and 59% having internet access. (TRAI Report)

And while the JAM initiative solved the problem of the unbanked population, digital identity, and
payment mode, there were a few other hurdles to cross before mass adoption of digital payment
became a reality in India.

The conventional Indian financial system was a patchwork of systems and processes with significant
interoperability issues. For example, the plethora of payment instruments did not talk, and it was
impossible to seamlessly send money from one mobile wallet to another wallet or bank. As an
analogy, imagine if Jio customers could only speak to Jio customers, and a call to Airtel customers
would take a day.

National Payments Corporation of India (NPCI) launched UPI in 2016. The primary intent was to
establish an instant real-time payment system that facilitates inter-bank, peer-to-peer, and real-time
payments to solve the interoperability problem, bring ease of transactions, and enable real-time
payments person-to-merchant transactions. The impact was such that UPI spawned a whole
ecosystem around it, creating many opportunities that several start-ups and entrepreneurs have
harnessed.

Some of the unique aspects that have made UPI the hero of digital payments include:

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The Pandemic Push: Since its launch in 2016, UPI crossed 1 billion transactions only in October
2019. But since the pandemic hit and we saw a widespread shift towards contactless payments, the
pace of growth picked up dramatically. By October 2020, UPI transactions had more than doubled to
cross the 2 billion mark. Since then, the uptick has been tremendous, and UPI transactions have
grown to touch 5.4 Bn in Mar 2022.

UPI transaction trend since 2016

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Growing Merchant Acceptance and QR Codes: UPI eased many of the merchant’s pain points,
making the receipt of payments super easy by scanning the merchant QR Code from any UPI-linked
mobile app. The QR code-based payment solution is highly inter-operable, contactless, hassle-free,
and secure, and comes with no additional charges. Moreover, for any merchant to create their QR
code, it only requires a bank account, smartphone, and access to the internet. Because of these benefits
and constant push from the banks and fintechs, penetration of QR codes has increased more than four
times in the last two years and now stands at 173 Mn.

While there are several payments system in India, such as NEFT, RTGS, IMPS, NACH, BBPS, etc.,
they all have standards of authentication and authorization that must be met for payment to be
processed. At the same time, there is no common language to standardize authentication and
authorization, which can enable banks, wallets, and other payment service providers to allow
transactions seamlessly. UPI, with the help of its APIs, connected disparate systems and helped solve
the authentication and authorization challenges to offer interoperability among existing entities in the
Indian financial system.
And the spinoff is an intelligent, ground-breaking system that enables transactions between two
parties with an exchange of “minimal information.”

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If there was one silver lining to the COVID-19 pandemic, it was the effect it had on India’s
digital payment journey. According to the Chief Operating Officer of the National Payments
Corporation of India (NPCI), the digitization of India’s payment landscape
was accelerated by the pandemic. The number of Unified Payments Interface (UPI)
transactions in September 2020 rose to over 180 crores in volume and over INR 3 lakh crore
in value.

With the rise of digital payments, there has also been an increase in fraudulent
scammers aiming to trick innocent people of their hard-earned money. A survey in May
2020 observed that 31% of respondents in India had recently been a victim of card fraud or
digital payments or knew someone else who had. Vulnerability to being scammed remained
one of the biggest concerns when it came to making digital payments.

If you’re a regular user of UPI apps to do your digital payments, there’s no need to panic.
Every section of society has fraudulent individuals looking to make a fast buck and the
newly growing digital payment sector is no exception. By staying cautious and vigilant, you
can ensure that your money stays safe and you don’t become a victim of U PI fraud.

Don’t share your financial details

You don’t share your password with others, do you? Hence, follow the same advice when it
comes to financial information such as your ATM/Debit Card pin, your CVV number, your
Security Answers or your OTP pin. Better still, ensure that you don’t have the same pin for
everything. If your ATM pin is the same as your UPI pin, you just leave yourself open to
more chances of fraud.

Check the UPI ID

The State Bank of India had to tweet to people warning them to donate to the correct PM
Cares Fund which had a UPI ID of pmcares@sbi. The bank cautioned people that many
fake but similar-sounding UPI IDs had come up (pmcarefund@sbi, pm.care@sbi, etc.) to
trick unwary people into sending money to the wrong ID.

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That’s advice that remains true for every transaction you make through your favoured UPI
app. Double and triple-check the UPI ID to where you are sending your money and ensure
it is the correct one before pressing the “Send Money” button.

Don’t input your UPI pin if you are receiving money

There have been reports of scam where people have been fooled into inputting their UPI pin
in response to a “receive” request from a fraudster. This usually happens when the victim is
looking to sell something and they are contacted by a fraudster who convinces them that
they can receive the money by inputting their UPI pin.

Be vigilant! Remember that you do need not input your UPI pin to receive money. Anyone
asking you to do so is a scammer.

Be wary of scam KYC calls

You may get phone calls from official-sounding people convincing you that they need to
update your profile for KYC (Know Your Customer) credentials. They will warn you of dire
consequences such as losing access to your account if you do not comply and will ask y ou
to provide your UPI pin and other financial data. Do not ever provide confidential financial
data such as your UPI pin on such a call. Remember that no major payment provider will
ask you for private information such as UPI pin, net banking password or ATM number.
Report such callers immediately.

Ensure you are protected

A strong security solution on your mobile device will go a long way in keeping you safe.
Quick Heal Total Security provides superior protection for your Android smartphone with
advanced features including SafePe, to secure all your financial transactions.

Unified Payment Interface (UPI) has made online payments very quick and easy. Nobody
is surprised by UPI's success. However, there has been an upsurge in the number of
incidences of fraud in online transactions using UPI. According to Ministry of Home
Affairs data, there has been a significant surge in cyber fraud reports made on the National

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Cyber Crime Reporting Portal (NCRP) as a result of UPI fraud. There was a 15.3 per cent
increase in cyber fraud complaints between the first and second quarters of 2022.

UPI fraud has escalated:

According to the data, 206198 complaints were made on the National Cyber Crime
Reporting Portal in the first quarter of 2022, increasing by 15.3 per cent to 237659 in the
second quarter. In the category of cybercrime, 62,350 UPI fraud complaints were recorded
in the first quarter of 2022, which grew to 84,145 in the second quarter of 2022. This is a
34 per cent increase. The main reason for this rise, however, is the increase in UPI
payments. According to the RBI, UPI payments increased by 1200 per cent in the fiscal
year ending September.

According to a Ministry of Home Affairs report, online financial fraud accounted for 67.9
per cent of total cybercrime. Debit/credit card/SIM switch fraud is another type of
financial theft that is on the rise. 24,270 similar frauds were discovered in the first quarter
of 2022, rising to 26,793 in the second quarter. However, the number of internet banking
complaints about the report has decreased. In the first quarter of 2022, a total of 20,443
internet banking complaints were reported, which has since decreased to 19,267 in the
second quarter.

However, UPI payments are steadily increasing. UPI payment, according to a report by
Abplive.com, had reached 10 lakh crore in May 2022, and this amount has now risen to
12.11 lakh crore. One of the easiest ways to do a transaction is using UPI, which mini mises
the burden of daily wallet carrying.

UPI-based transactions, which have witnessed an over four-fold increase both in volume and value
terms over the last two years, as well as an increase in the amount of frauds.

UPI (Unified Payments Interface) is basically an instant real-time payment system developed by the
National Payments Corporation of India (NPCI) facilitating inter-bank peer-to-peer and person-to-
merchant transactions.

As on March 2020, there were 125 crore UPI based transactions, amounting to close to ₹2.1-lakh
crore in value terms. NPCI data suggests that this increased to around 540 crore transactions,
amounting to ₹9.6-lakh crore in value terms in March 2022.

25
Given the massive increase in transaction volumes on the UPI platform, industry watchers claim UPI
fraud now accounts for most of the cyber fraud incidents, though numbers were hard to come by.

RBI DATA

According to data available in the Reserve Bank of India’s latest trend and progress report, during
the period April-September 2021-22, the total number of frauds in various banking operations based
on the date of reporting increased to 4,071, as against 3,499 reported in the same period last year.

However, the amount involved in such frauds declined to ₹36,342 crore (₹64,261 crore) during said
period. The number of card or internet related frauds also increased marginally to 1,532, amounting
to ₹60 crore during FY2022, as against around 1,247 frauds amounting to ₹49 crore same period last
year.

“In terms of area of operations, an overwhelming majority of cases reported during 2020-21 in terms
of number and amount involved related to advances, while frauds involving card or online
transactions made up 34.6 per cent of the number of cases,” the RBI report said.

According to Manish Agrawal, Head-Credit Intelligence and Control, HDFC Bank, UPI’s simple and
secure architecture makes it “unique” and there is hardly any vulnerability in the system. The frauds
happen due to the vulnerability in the minds of users, which fraudsters take advantage of.

Around 65-75 per cent of UPI frauds occur during peak business hours between 7 a.m. and 7 p.m.
The average ticket size of such fraudulent transactions is typically low, with around 50 per cent of
frauds being less than ₹10,000, while only one-to-two per cent of fraudulent transactions are ₹1 lakh
and above.

More than 60 per cent of UPI fraud victims are salaried individuals, and nearly 75-85 per cent of the
victims are in the age bracket of less than 45 years, Agarwal said.

Further, more than 50 per cent of UPI frauds are in metropolitan areas, while rural geographies
account for less than seven per cent.

Agrawal said customers should not download third party apps for resolution of complaints; should
not respond to or click unverified links sent by unknown persons/institutions through
SMS/WhatsApp; and should never share sensitive banking details such as UPI PIN, debit/credit card
number, CVV etc.

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 CHAPTER 4
CONCLUSION

As per the above study it shown that students are extensively using the 3 rd partyUPI/BHIM on mobile
phones. For students it is aconvenient payment system and can be a very useful tool with students for
online transactions. This will help students for digital payments without need of any complex
mechanism and boostcountries economy with transparency.On phone online transaction option for
recharge, bill payments, rent, bank balance, etc. are available. Banks and NPCI have to promote native
BHIM App as 3rd party apps are more popular among the students.

In this technological world, where people are going techno-freak, the Unified Payment Interface
System is delivering a great user-friendly experience. People will need to have a better understanding
of the technology if they want to use this system. All the banks are not completely computerized.
Implementing UPI means a better trained staff, merchants, retailers, and upgrading the existing
system of technology. UPI is a grand step towards making the cashless payments faster, smoother
and easier. Unified Payments Interface powers multiple bank accounts into a single mobile
application (of any participating bank), merging several banking features, seamless fund routing &
merchant payments into one hood.

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. In this study it is
found that the awareness of UPI payments services among merchants is very high in urban areas than
in rural areas, so it must be made available in every area. Merchants are very much satisfied by UPI
services and the security system can be strengthened to avoid cyber threats in the future. Merchants
must improve awareness in legislative measures which will be more useful to them. In future, number
of young entrepreneurs can be increased by encouraging them in entrepreneurship. Women
entrepreneurs must be guided and encouraged highly to do well in entrepreneurship. As digital
transactions in increasing, it is becoming a monopoly market. So, the government is keeping on check
in monopoly risks and some UPI apps has brought limitation in transactions, also charging fees for
transactions when the prescribed limit is exceeded.

Making payment is all about convenience, security, and speed. India’s payment system evolved from
the barter system to cash to card to digital payment mode. The security is the biggest concern among
the consumers and can be considered as a key factor for the adoption of the UPI payments. India is a
27
cash dominant society, even though there is a rapid increase in the using digital payment modes, there
is still a lack of awareness among people concerning security, data privacy, etc. which is leading to
them believing that making payments as card or cash is much better than using UPI application.
Unified Payment Interface is considered as the biggest competitor for UPI payments. The customer
is the king and they are looking for a seamless and convenient way of payments through internet and
UPI is the best option for the customers for machining transactions.

The study provides an addition in the literature of financial inclusion and economic development.
Considering an innovative variable of UPI in the area of digital finance and financial inclusion, the
paper shows how financial stability and trust mediates act as determinants of the financial inclusion
and economic development respectively.

The advent of digitalization itself is a path-breaking innovation, and UPI is one such innovation which
supports the digital ecosystem and contributes to the inclusion of the bottom of the pyramid into the
financial system. The paper concludes that UPI even gives safe transaction to the individuals who
hold PMJDY accounts. If these individuals will transact through these programming interphases, this
will help their inclusion in the financial system and leads to economic development.

The paper can be taken on another level by extending the scale of the study, and by taking more
determinants into account. The study can be done in multiple settings with different economic cycles,
and the reliability of the study can be tested. The factors like government intervention and the
inclusion of informal sector can also be considered. Behavioural factors can also be studied under the
digital innovation and financial inclusion.

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

28
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.

Unified payment interface is a big step in terms of achieving a cashless econ-omy. The move arrives
as a boost to an economy where the number of mobile wallet players and ecommerce sites is
increasing. UPI will soon make e-com-merce transactions easier alongside facilitating
micropayments and per-son-to-person (P2P) payments.Thus, considering their simplicity, openness
and convenience, UPI payments fit in well with the move to migrate towards a cashless and digitized
economy.

UPI is a payment platform with a disruptive technology coming from the Indian Saddles which would
enable and empower retail digital payments. It is a fantastic value proposition as it includes simple
authentication process, simple issuance & acquiring infrastructure, national interoperability and real-
time money transfer, which makes the transaction experience user- friendly and hassle free.

Most of the high-frequency small transactions are still in cash. Hence the ease and convenience UPI
offers will help individuals prefer to pay their day- to- day expenses like bill payments, fund transfer
etc. digitally.

It will be interesting to see how going forward UPI will smoothen the path for less-cash economy,
what with banks and several digital wallets having joined the bandwagon already. UPI is a clear step
towards breaking the silos that exist in the BFSI industry by removing the multiple multi-
authentication processes with a one-click process.

While banks were initially sceptical of payment wallets, this UPI will definitely have an upper hand
over the existing digital wallets and streamlines the whole process. On the other side, the ATM sector
will further strengthen along with the existence of UPI as it will bring on more users into the digital
age while retaining their ATM accounts.

Moreover, this will also help in the rise and adoption of Aadhaar ATMs, cardless ATMs, with
disruptive new age technologies, wherein the ATMs will dispense cash without inserting ATM cards.

29
 Questionnaire

1. Profile of the Respondent

(i) Name of the Respondent (optional):

(ii) Gender: a. Male b. Female c. Others

(iii) Age (in years): a.18-25 b. 25 – 35 c. 35– 45 d. 45- 60 e. Above 60

(iv) Educational qualifications of Respondent:

a. Up to 5th b. 6th to 10th c. Secondary d. Higher Secondary

e. Graduate f. Post graduate and above

(v) Occupation of the Respondent:

a. Salaried Employee b. Self-employed/Business owner/Professional

c. Daily worker/ Daily wage earner d. Retired person

e. Student f. Home maker g. Others

(vi) Annual Income (In Rs): a. Upto 1 lakh b. 1-5 lakh c. Above 5 lakh

(vii) Place of Residence: Address ______ City: _____________ State _________

2. Your awareness on digital payment products (can tick more th an one):

a. Debit/credit card b. Net banking c. NEFT/RTGS d. Mobile banking

e. BHIM UPI f. Prepaid cards, mobile wallets

g. IMPS h. Others i. None

3. How did you come to know about digital payments (can tick more than one):

a. Banks b. Non-banks c. Friends d. Advertisement e. News

f. Others

4. How do you generally receive the money (most of the time) for your regular

expenses

a. Cash b. Cheque c. Digital mode

30
5. In order of preference (1/2/3; 1 being the most used), which mode have you used

in making payments, say in the last one or two months? (in terms of transactions)

a. Cash b. Cheque c. Digital mode

6. How much proportion of major payment is done by your first preference

a.<50% b. 50-70 % c. 70-90% d. >90%

7. Payments done in the last month (in terms of amount)

Amount of

transaction(in Rs.)

Mode of Financial Transactions

Below 100 Digital Cash Cheque

100-200 Digital Cash Cheque

200-500 Digital Cash Cheque

500-2000 Digital Cash Cheque

2000-5000 Digital Cash Cheque

Above 5000 Digital Cash Cheque

8. Purpose of digital transactions done by you (can tick more than one):

a. Sending money b. Bill payment c. Shopping d. Booking Tickets

e. Hotel/Restaurants/Petrol pump/Taxi f. Payment vide food ordering apps

g. Mobile/TV recharge h. Groceries i. Others

j. Non-financial (balance checking, ordering cheque book, etc.)

9. Preferred mode of digital payment (can tick more than one)

a. Debit/credit card b. Net banking c. NEFT/RTGS d. Mobile banking

e. BHIM UPI f. Prepaid cards, mobile wallets g. IMPS

h. Others (pls specify) i. Do not use digital payments

31
10. What is the reason for using above mode of digital payments (If response to Q 9 is

other than ‘Do not use digital payments’)

a. Convenience b. Offers & Discounts c. Trust

11. Any hindrance faced while doing digital payments (can tick more than one)

a. Digital transactions take more time / are complex as compared to cash

b. Digital transactions are costly as compared to cash

c. Less trust in digital transaction (unsafe, risky, decline of transaction, etc.)

d. I do not have payment products (cards, wallets) or device (mobile, laptop)

e. Lack of Point of Sale (PoS) machines / QR codes / internet connectivity

f. Uncomfortable/Unfamiliar with digital payments

g. No major problem faced while doing digital payments

12. Do you share your password/PIN/OTP for cards, bank accounts, etc. with other

person?

a. Yes b. No c. Sometime

13. How often do you change PIN for your debit/credit card/ mobile banking

a. Once in a quarter b. Never changed

c. Change only when prompted by the bank / non-bank to change it

d. Other frequency (in year)

14. Your opinion about using PIN/OTP for small value transactions (Up to Rs. 2000)

a. Yes, because it makes transactions safe b. No, it is an inconvenience

15. Your suggestion to promote digital payments ________________________

32
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