Friday, December 2, 2016

UPI - The next gen Payment system

There's been a lot of excitement about new UPI-enabled apps such like Axis Bank’s Axis Pay, ICICI's Pockets, and Flipkarts PhonePe, but what do these apps do?  In really simple terms, the UPI (Unified Payments Interface) is a payments system - just like a cheque, your debit card, or a mobile wallet.

The UPI, which went live in Septembet this year is interoperable between banks, so it doesn't matter if you have an account with Axis Bank or ICICI Bank or Yes Bank - and that's thanks to the NPCI (National Payments Corporation of India), which is the same organisation that enables our ATMs to be interoperable, allowing you to use an Axis ATM card in an ICICI ATM, for example. The UPI has gone live with most of the private sector bank and PSU banks. We can expect almost all banks to be on live by March'2017.

What is UPI?

It's a payments system. You could use UPI to transfer money between friends and family or to pay your landlord, or to make a payment at a shop, or to buy something online. The money will be debited from your bank account, and transferred to the recipients account instantly and securely.

It's based on the IMPS (Immediate Payment Service) system that you might have used with your netbanking app by now, and its available 24x7, even on Sundays and holidays.

What is Virtual Payment Address 

"Virtual Payment Address" is an identifier (that takes a form of abc@abcbank wherein "abc" is a unique name that you can choose for yourself) that can be uniquely mapped to an individual account using a translation service. Like I have my virtual address as rajtalati@icici. It requires seconds to generate VPA through bank's mobile app or throu' internet banking

How is it different from NEFT, RTGS, IMPS?

NEFT and RTGS both involve a pretty significant delay, so you don't need to bother about that. UPI is based on IMPS, so in a basic sense, there's no big difference. UPI is basically IMPS designed for a mobile world - it's much more convenient to use, and easier to set up. What does that mean? Well, let's say that you want to transfer money right now - maybe your friends just got married and you want to send them some cash as a gift they can use in any way they want. Or you need to send money for any other reason.

Right now, using IMPS, you'll have to go to your bank's app - no using third-party apps for this - and go to the funds transfer section. Then you'll have to add a recipient; you have to authorise a recipient before you can send them money, and then until you manually remove them, you're stuck with them in the recipients list where you could accidentally select them at any time. Adding a recipient means entering a lot of details about them as well - you need to know their bank account number, and IFSC code (and depending on the bank app you're using, also their bank branch), which are all long strings of numbers. It's confusing and painstaking.

With UPI, just open a UPI app that's linked to your account, enter the payee ID (which is something simple and memorable like rajtalati@icici), the amount, and click transfer.

How do I get started with UPI?

It's really simple - all you have to do is download one of the banking apps from the Google Play store that supports the UPI. The small list of banks is here: Andhra Bank, Axis Bank, Bank of Maharashtra, Bhartiya Mahila Bank, Canara Bank, Catholic Syrian Bank, DCB Bank, Federal Bank, ICICI Bank, TJSB Sahakari Bank, Oriental Bank of Commerce, Karnataka Bank, UCO Bank, Union Bank of India, United Bank of India, Punjab National Bank, South Indian Bank, Vijaya Bank and YES Bank.

Once you download the app, you need to verify your phone number, and then link your bank account to the app. Once you've confirmed your bank details, you're good to go and can start using the app to send or receive money.

Do I have to have a bank account to use this?

Yes. The UPI app has to be linked to a bank account to send or receive money.

Do I have to have an ICICI account to use Pockets or a Yes Bank account to use PhonePe? i.e their UPI apps.

No. This is one of the big plus points of the UPI - it's interoperable between banks, so you don't need to have a different app for every account you use. So with one app of anyone bank can link your accounts with that bank or any other banks.If you link more then 1 account then need to mark a default bank for receiving payment and default bank for sending payment. You can change default bank anytime you wish to.

How can I receive money

Login to Mobile app and click on UPI.
Click on UPI and then choose "Collect via UPI"
Enter the details of the transaction such as the VPA of the person you would like to collect from, amount and remarks.You can also choose if you would like to receive the money immediately or in the next 7 days. Click on Submit
Please review the next screen carefully to ensure you have filled all details correctly.
Click on Submit to initiate a Collect payment via UPI. When the person you have requested money from authorises the transaction and money is credited into your account, you will be notified.

Amount Restriction :

Currently per transaction restriction is Rs.100000 per transaction.

What if I loose my mobile : 

UPI is adhered to two factor guidelines of RBI or your mobile app pin and UPI pin.


At present there is no seperate charges for UPI .Only Rs.5.00 +S.Tax is debited to you account towards IMPS charge which anyways you pay for netbanking.

Why is this better than using a wallet?

One question that comes up a lot is whether UPI is like a mobile wallet, and whether the UPI is going to remove the need for mobile wallets. No,I Don't think so. We have a big market and both of them can survive together.

Rather wallet has already grabbed a space in people's mind now it's UPI's turn and will depend on how much bank pushes it by way of advertisement and creating awareness within their client base. One thing is very sure it will give tough competition to wallets in future.

Transform India with E-wallets - Paytm karo, Oxigen,Mobikwik, Recharge, Payu

Demonetisation psychosis has taken over India since 8th November... From Multiplex to Shopkeeper, from Car dealer to two wheeler shop, from mall to big bazaar every one has suffered business loss and still it would take months for things to settle down.

Apart from honest Indian citizen, in all  this  chaos if  someone is  happy and  enjoying  the  party is e-wallets and online payment portals like Paytm, Oxigen, Mobikwik, Payu, Freecharge, msikkay, chillr.......One of the political parties controversial leader tweeted that our Prime minister has become brand ambassador of big corporates referring to an advertisement of paytm published very next day of demonetisation with his big picture. As they say "action speaks louder than words" our Prime minister actions shows he is a brand ambassador for digital India, Clean India, Corruption free India, Agriculturally flourishing and India with great infrastructure.

But what this e-wallet actually is. Lot of us are already using it and many of us wants to do so. So let's know little more about it and contribute to mission digital India :

What is e-wallet  
E-wallet is nothing but a replacement of our physical wallet which you carry, in our pocket. The way you use  it to make payment for movie ticket, petrol refill, Vegetable vendor or lending money to your friend you can use electronic or e-wallet for the same.
Types of Wallets

According to the Reserve Bank of India (RBI), there are three kinds of wallets: closed, semi-closed and open.
1) A closed wallet is issued by a company to a consumer for buying goods and services exclusively from that company. These instruments do not permit cash withdrawal or redemption. Companies such as, and offer closed wallets. Mostly these function as an account where money gets credited in case of a refund due to cancellation or return of a product or service.
2) A semi-closed wallet can be used to buy goods and services, including financial services, at clearly identified merchant locations or establishments, which have a specific contract with the issuer to accept the payment instruments. Semi-closed wallets also do not permit cash withdrawal or redemption by the holder.In the payments space, companies such as Oxigen Services India Pvt. Ltd, Citrus Payment Solutions Pvt. Ltd and Paytm etc.offer semi-closed wallets. This wallet can be used not only at multiplexes such as PVR and Inox but also to recharge direct-to-home services such as Dish tv, to make Utility bill payments or for payment to anyone or everyone.
3) Then there are open wallets, which can be used for purchase of goods and services, including financial services such as funds transfer at merchant locations or point of sale terminals that accept cards, and also cash withdrawal at automated teller machines or business correspondents. These kinds of wallets can only be issued by banks.
An example of open wallet is M-pesa by Vodafone India Ltd in partnership with ICICI Bank Ltd. Vodafone also offers M-pesa as a semi-closed wallet.
We will limit this blog to semi-closed wallets.The transfer in wallets are done by using payment gateway system. “These wallets are handled by non-bank entities and as per regulations they need to keep total money lying in wallets across clients in an escrow account.” 
Does this money earn interest
Yes, but not to you, Interest earned is income of wallet company and how much depends on the agreement between the bank and the company. This interest is in the range of 4-6%. In some cases it is even higher then 6%. 
Merchants don’t get any benefit from the money lying in wallets.However, companies give offers such as Rs.50 cash back on transaction to consumers.
How to feed wallet 
The way we feed our physical wallet we can feed our e-wallet either by net banking, Debit card, Credit card, IMPS or ATM card or by receiving money from someone.
Maximum Amount 

As in our physical wallet we don't keep too much of cash, RBI has kept upper limit of Rs.100000 at any point in time for KYC complied customer otherwise it's Rs.20000. 

How to transfer money 

All you need is the phone no. or email id, or facebook user id. just need to login into your e wallet fill in any of the above fields, mention amount, reason (optional) and send. Paytm has provided option of scanning QR code i.e the picture displayed outside the shop with paytm logo once scanned you don't require to enter any details of recipient.

How recipient gets money 

Recipient receives SMS,email about intimation of credit if he doesn't have installed the wallet app, he need to download it and payment will be credited to his wallet. If app is already downloaded by merchant he will receive immediate credit to his wallet.

Monthly Limit 

Monthly limit of Rs.100000 applies for merchant transaction and transfers. Whereas you can transfer only Rs.25000/month to other account or bank.


To send money to other wallet or to make payment at merchant outlet you do not need to pay any charges but transferring it to a bank account will attract charges in the range of 1% to 4%+S. Tax.  In KYC complied cases  it is in the range of 1 - 2%.

How it is different from Credit Card 

Credit card is more like a post paid card whereas wallet is pre paid card. Other bigger aspect is charges involved Wallet are much cheaper, almost free and convenient as compared to credit card which attracts charges in the range of 1.99% to 2.99%.

How to use it for offline payments?

You can make cash-less payments using Wallet even without internet connectivity If a retailer accepts wallet as a mode of payment, you can either use QR codes or bar codes, along with a One-Time Password (OTP) to pay them. To do this, you need to open the app, select the ‘Pay or Send’ option, and choose between QR code or bar codes (provided in two separate tabs). Just scan the code and enter the OTP to authorize the payment offline. This feature can be especially useful right now, when the whole country is facing a cash crunch and internet connectivity is still not good enough to facilitate online transactions.

SBI Buddy 

Wallet by one of India's biggest bank with customer base in remotest part of the country. Being from SBI people feel more confident to transact through it. The features and all other bsic details are same as mentioned above only the charges in case of transfer of funds to bank for SBI Buddy is 3%+ S.Tax.

How do Wallet providers make profit 

The big question comes is from where this people makes money, although at present bigger focus for them is to increase there subscriber base, so whatever profit they make either part of it or full is passed on to you in form of wallet credit or cash back. But they make profit from following sources :

a) Profit for wallet companies comes from comission from different utilities like mobile recharge, DTH, Uber, Ola etc.

b) Interest earned on cumulative money of customers lying in wallet i.e escrow account  let's say there are 100000 customers having credit of Rs.20000 each in their wallet turns to Rs.200 Crore.

c) Charges ranging from 1 to 4% for transferring money to your bank account. So whenever a merchant or client transfers money to his account they earn by way of charges on them.

d) Advertisement revenue on their site or portal.

Is there a better option then e-wallet :

UPI (Unified Payment Interface) allows launched in September this year person-to-person money transfer. UPI-enabled bank apps allow transactions through any smartphone, using VPA (virtual payment address). A big advantage of this model is that it does not require an account number, bank details or IFSC code. One just needs to create a virtual ID with UPI-enabled apps. Transactions done through the UPI app can be done 24/7 with immediate transfer of money from one bank account to another. Taking the UPI system a notch up, TruePay, a UPI-enabled app, lets customers transfer money directly to a bank account without even the virtual ID. To transfer money using TruePay, money can be transferred just with mobile numbers. It's almost as simple as sending an SMS, but the sender and the receiver must both be registered with TruePay. Almost all the bigger banks has launched there UPI app. 

How UPI is better :

Transferring money digitally to your bank account through UPI is much the same as paying cash, as the money doesn't go to an e-wallet from where you have to transfer it to your bank account. It hits your bank account directly. With UPI, one doesn't have to top up the e-wallet to spend money from it or even worry about which e-wallet is better for making payments. Also, while you do not earn interest on money loaded into an e-wallet, with the use of UPI, you earn interest on money sitting in your bank account.

How digital payments will benefit our country :

Out of population of 124 crore we have only 1.62 crore tax payees . We know the actual figure should be in multiples, then where is the problem. Lot of businesses are carried out traditionally in cash, and cash payment has become a trend, hence they do not show their income and pay taxes. 

Just think of income of nearby kirana store, namkeen shop, your vegetable vendor or most of the people whom you make payment by way of cash. They might be earning much more then the taxable limit but no one files return or pay taxes, resulting in higher tax rates for honest citizens. By making payment through wallets,internet bank, debit card, cheque all figures will reflect in their bank account and they would be forced to file tax return

Is it really that simple - no there are lot of challenges like, power problems, internet connectivity, slow speed and cost. It just needs a commitment to overcome challenges let's decide that today onwards we will avoid cash payment and use any of the above channel. Together with it educate and motivate people to open bank accounts and start using non cash payment options.  

In turn it will help government to lower tax rates and to spend excess collection of tax on Infrastructure, clean water, cleanliness, sanitation, power and create a better India which we all want. Let's join our Hon'ble Prime Minister in this noble mission of making a new cashless India.

Saturday, November 26, 2016

"Decoding-Demonetisation" done at Yuvalay

Yesterday's lecture coverage in today's Divya Bhaskar.
Please read with 2 corrections in reporting :
1) In last 10 years cash circulation had increased extraordinarily, going forward which will decrease
2) NBFC's will face stress in short to medium term
Instead of reported

Divya Bhaskar dated 26th November


"Demystifying - Demonetisation" done for JCI Baroda Metro on 14th November

Wednesday, June 15, 2016

Art of Money management for School and College Student

Conducted a session on "Art of Money Management" at "Yuvalay" for H.Sc. and College Student under our financial literacy initiative.

Wednesday, March 2, 2016

Featured on Wealthforum

Important message for all advisors

Raj Talati, ABM Investments, Vadodara

24th February 2016

In a nutshell

Raj recently conducted an IFA workshop for VIFAA - Vadodara's IFA Association, in which he played a 4 minute audio clip at the beginning of his session.

In RJ Naved style, Raj highlights the responsibility that every IFA shoulders, of making their clients' dreams and aspirations turn into a happy reality rather than a bad nightmare.

Raj's message at the end of this 4 minute clip is a timely reminder to all advisors to act responsibly and judiciously - he urges you to internalize that your clients have entrusted their dreams and aspirations to you, in good faith.