You are right- the lack of trust is the key inhibitor across form factors when it comes to reaching the next 300 m users. There are no easy solutions to achieving penetration. The ecosystem will have to pull all stops to engender trust and awareness and couple that with enhancing user convenience and utility ( which is what the RBI did with the recent auto- load feature). Adjacently - NPCI does not presently break down UPI lite figures / estimates. It will help to get some sunlight there.
About MDR- we already have a template in MDR for debit cards. That template can be gainfully deployed in UPI context as well. If you recall, RBI used GST thresholds to differentiate between merchants in Debit card MDR ( merchants with Turnover below GST thresholds are exempted and those above it, paid MDR in proportion to the transaction subject to a INR cap). It's plain to see that smaller merchants will preserve their incentives to accept UPI in this model.
About credit as a hook, am glad we are in principle agreement. Connectivity may not be a big challenge IMV given India boasts of lowest data costs anywhere in the world. (At the same time HH credit : GDP for India is lower than comparable economies).
UPI lite - Penetration (of UPI usage) is still bad in the lowest level with household income less than 1L, UPI lite hasnt picked up there mostly because problem was never 4/6 digit pin, it was trust and connectivity, trust goes worse with UPI lite and connectivity is still not at par to increase penetration
Relax MDR restrictions - For a country with average UPI transaction amount 1500 (down from 1800) and subsequently still going down, the trend isnt helpful for merchants to pay MDR, they will levy this on the consumer who will end up with same issue as credit card, they will start using cash. for above 2000 P2M they started asking 1.1% interchange fee, if they dont even take that, tech systems will suffer, companies are already losing a lot in the race to maintain success rate of UPI transaction, once winner was Paytm and they took away its banking license so thats gone too
Credit as a hook - only thing that might work in favour of people but again u still need internet connectivity in rural areas to better penetration and then adoption
Thank you for your thoughts, Shruti.
You are right- the lack of trust is the key inhibitor across form factors when it comes to reaching the next 300 m users. There are no easy solutions to achieving penetration. The ecosystem will have to pull all stops to engender trust and awareness and couple that with enhancing user convenience and utility ( which is what the RBI did with the recent auto- load feature). Adjacently - NPCI does not presently break down UPI lite figures / estimates. It will help to get some sunlight there.
About MDR- we already have a template in MDR for debit cards. That template can be gainfully deployed in UPI context as well. If you recall, RBI used GST thresholds to differentiate between merchants in Debit card MDR ( merchants with Turnover below GST thresholds are exempted and those above it, paid MDR in proportion to the transaction subject to a INR cap). It's plain to see that smaller merchants will preserve their incentives to accept UPI in this model.
About credit as a hook, am glad we are in principle agreement. Connectivity may not be a big challenge IMV given India boasts of lowest data costs anywhere in the world. (At the same time HH credit : GDP for India is lower than comparable economies).
UPI lite - Penetration (of UPI usage) is still bad in the lowest level with household income less than 1L, UPI lite hasnt picked up there mostly because problem was never 4/6 digit pin, it was trust and connectivity, trust goes worse with UPI lite and connectivity is still not at par to increase penetration
Relax MDR restrictions - For a country with average UPI transaction amount 1500 (down from 1800) and subsequently still going down, the trend isnt helpful for merchants to pay MDR, they will levy this on the consumer who will end up with same issue as credit card, they will start using cash. for above 2000 P2M they started asking 1.1% interchange fee, if they dont even take that, tech systems will suffer, companies are already losing a lot in the race to maintain success rate of UPI transaction, once winner was Paytm and they took away its banking license so thats gone too
Credit as a hook - only thing that might work in favour of people but again u still need internet connectivity in rural areas to better penetration and then adoption
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