E-commerce companies are hopeful that the new payment facility being launched by the National Payments Corporation will help wean online shoppers off the cashon-delivery system. The new payment gateway, called unified payment interface (UPI), may be launched in the next two months and will make transactions through various modes such as credit cards, debit cards, net banking, digital wallets and prepaid cards interoperable and seamless, especially through mobile devices.
In India, cash-on-delivery (CoD) accounts for almost twothirds of online retailers' total transactions. Etailers are keen on reducing transactions completed through this mode as it is difficult for them to track the money collected on delivery of goods till it is deposited in the bank.
Once UPI becomes operational, one can link money to an email address, mobile number or even tweet it without keying in the bank account details. "Any of these could act as identifiers, which will be linked to the Aadhaar number and the bank account in the back end," said Amit Lakhotia, vice-president (payments) at Paytm.
He said it will significantly reduce cash payments by merchants as well as customers since small merchants won't have to set up payment gateways for transactions and more customers will be prompted to make payments online since they will be less complex. According to Lakhotia, the system reduces the number of steps involved in making a transaction. "It hides the complexity from the customer. Your email ID or mobile becomes the front and nobody except you knows what is linked to it at the back end it could be a wallet or a bank account," he said, adding that Paytm is very keen to adopt the new payment system, once operational.
The interface is being developed by the National Payments Corporation of India (NPCI). Nandan Nilekani, the former chairman of Unique Identification Authority of India (UIDAI), is an advisor to NPCI on innovation and public policy. Explaining the working of the new payment interface, Nilekani said it puts a thin layer on all existing payment mechanisms in the country. "The idea is that the layer can be accessed from any phone and various applications can be built on top of that to simplify payments," he said.
According to Nilekani, the ecommerce boom in the country, popularity of digital wallets and the new banks being launched have put the payments ecosystem is in a state of flux. "There is enormous energy, but we have to be careful that islands of payments are not created," he said, adding that UPI will facilitate interoperability