The government just made it easier for you to make online payments

The National Payments Corporation of India has launched a new electronic fund transfer protocol, and all Indian online wallet companies, including Paytm, Mobikwik and FreeCharge, are aiming to integrate their services with this protocol, so that their business is not rendered redundant with the changes.

The new protocol is called Unified Payments Interface (UPI), and will come into effect from today. UPI is a single interface across all NPCI systems, which would allow customers to instantaneously transfer funds across different banks using a single identification and password.

The protocol would enable multiple bank accounts linked to a single mobile banking app, and money can be both received and requested through the same interface. This could, of course, mean that consumers won’t have to store money in multiple electronic wallets.

The digital wallet companies are of the opinion that with UPI, it will be easier for consumers to load cash onto the wallet and at the same time, it will not impact their business, especially in the short term.

"UPI will bring easier and cost effective methods to load money in Paytm," said Vijay Shekhar Sharma, CEO, Paytm.

Since the technology is easy to use, it is expected to transform the way Indians make digital payments. Sensing this, India's top online retailer Flipkart recently acquired UPI-based payments company PhonePe.

"UPI has the potential of transforming the entire payments ecosystem in the country," said Flipkart CEO Binny Bansal.

With UPI, customers would also not need to exchange sensitive information such as bank account numbers and card details, while also avoiding multi-level intervention. "As UPI comes into being we are confident that on the rails of UPI, we will be able to enable a faster and more secure transaction across merchants," said Govind Rajan, COO of FreeCharge.

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