NEW DELHI: The Unified Payment Interface (UPI), the digital payment system built by the government of India, is now ready to revolutionise the payment system in the Indian stock market.
The National Payment Corporation of India (NPCI) in collaboration with brokerage firms and clearing houses has launched the beta phase of ‘UPI for Secondary Market’ from 1 January.
UPI for Secondary market is an ASBA (Application Supported by Blocked Amount) like service, where an investor can block their amount used for buying stocks in the secondary market in their bank accounts instead of transferring it to the broker’s account. The amount will only be debited by the Clearing Corporations upon trade confirmation during settlement. Clearing Corporations will directly process payouts to these clients on a T+1 basis.
Currently, ASBA facility is only limited for buying shares from the primary market, that is, in applying for IPOs. The UPI-enabled ASBA facility will change the way investors buy stocks in the secondary market. UPI is now touching every aspect of people’s lives. It is no longer limited to payments to grocery stores, roadside vegetable vendors or for Uber taxi rides. UPI is growing bigger and better with every passing day. Here’s a reminder to people what UPI can do and where all it can be used apart from buying stocks in the secondary market:
UPI payments through credit card: Earlier, UPI payments could be linked to bank accounts, prepaid wallets, overdraft facility. Last year, UPI facilitated payments through credit cards. Several public sector and private banks have already launched this facility on RuPay credit cards. The functionality can be availed through registering the credit card with third party UPI apps. Cardholders can enroll their active primary cards on UPI and make payments to merchants (P2M transactions) using their credit cards. This facility is free for customers. The linking of RuPay credit cards to UPI will ensure that customers will no longer have to carry their credit cards with them at all times for payments.
Recently, IndusInd Bank became the first bank in the country to integrate UPI functionality with a Corporate Credit Card. In a press statement, the bank said: “IndusInd Bank eSvarna credit cardholders can look forward to a luxurious travel experience, including complimentary lounge access and fuel surcharge waiver. Corporate travellers can receive the added benefit of comprehensive travel insurance coverage and an exclusive rewards program meticulously crafted for corporate entities, which makes this credit card a valuable financial solution for various business transactions.”
Enhanced UPI transaction limit for specified categories: The RBI recently enhanced the UPI transaction limit for payment to hospitals and educational institutions from R1 lakh to R5 lakh per transaction.
This, according to the central bank, will help the consumers to make UPI payments of higher amounts for education and healthcare purposes. For normal UPI the transaction limit is up to R1 lakh per transaction. For few specific categories of transaction in UPI like capital markets, collections, insurance, foreign inward remittances the transaction limit is up to R2 lakh and for Initial Public Offering
and retail direct scheme the limit is up to R5 lakh per transaction.
Bringing Prepaid Payment Instruments (PPI Wallets) to UPI ecosystem: Last year, the RBI allowed the PPI wallets to be part of the interoperable UPI ecosystem. With this addition to UPI, customers now have the choice of using any bank accounts, RuPay Credit card and prepaid wallets on UPI enabled apps. Payments made from prepaid wallets via UPI apps are free of cost. Though there are interchange charges applicable only for the PPI merchant transactions.
NRIs can use UPI for domestic transactions: NRIs with international numbers can do UPI transactions in India. NRIs through their NRE/NRO accounts can make UPI payments even through their international mobile numbers. This was allowed through a circular in January 2023. However, such transactions must follow all the FEMA (Foreign Exchange Management Act) and Anti-money laundering regulations.
UPI Lite and Lite X: This payment solution allows low value transactions up to R500 without utilising a Remitter bank’s core banking systems in real-time. These payments can be made without the user having to key in the PIN.
With UPI Lite X, one can make payments even in places with bad connectivity and poor networks. These payments can be made without the need of an internet connection on the payers or the recipient’s phone.