“Parādhanamula koraku norula madi-karaga baliki kaḍupu nimpa diriginaṭṭi” — For the sake of others’ wealth, one goes around trying to please others, aiming to fill their stomach. This captures the struggle of the common man striving to achieve financial stability and maintain a steady cash flow to meet daily needs.
As a part of the Indian Government’s Digital India initiative, the Internet was made available to large groups of people at a reasonable price. This resulted in India contributing to nearly 46% of the world’s digital transactions (as of 2022) [8]. In fiscal year 2024, India recorded that 79.7% of the digital transactions are being done using the Unified Payments Interface, or UPI [3].
What is UPI?
UPI is an instant payment system developed by the National Payments Corporation of India (NPCI). Think of UPI as a protocol that processes peer-to-peer/peer-to-merchant (P2P/P2M) transactions. This differs from a Prepaid Payment Instrument (PPI). UPI isn’t a card/mobile wallet that loads and stores money from your bank account and then uses it to pay forward. It is an interbank transaction system that deposits cash from one’s bank account to another person’s, even if they are using different banks. UPI can be accessed on apps like BHIM, developed by NPCI, or TPAP (Third Party Application Provider) apps like PhonePe, Google Pay, and Paytm, among others, and PSP (Payment Service Provider) banking apps [4].
Rome Wasn’t Built in a Day
Launched in 2016, UPI requires a Virtual Payment Address (VPA), mobile number, or QR code to initiate payments. Even after its launch, people still lacked a reason to use UPI. Another reason is that the Internet still isn’t widely used among people of all groups. On top of that, many believed that having banking details linked to mobile apps wouldn’t be safe if a phone got lost or stolen.
Even if people had access to the resources to access UPI, such as a stable Internet connection at a reasonable price, they did not see why they had to use it. Then on November 8, 2016, the Government of India announced the demonetization of all ₹500 and ₹1,000 banknotes. It was aimed at curbing black money and the counterfeiting of currency notes. This pushed a sizeable amount of people to start using UPI. A spike from 0.29 million transactions to 1.99 million transactions was observed between November and December 2016. This number kept growing until October 2019, when over a billion transactions were recorded made using UPI. However, by October 2020, the number of transactions exceeded 2 billion [6]. In other words, it took about three years for UPI to reach over a billion transactions per month, whereas it only took a year to double it. The reason? The COVID pandemic.
People were scared, a nationwide lockdown was imposed, and there were restrictions on leaving the homes unless it was an emergency. So they turned to UPIs to pay their transactions as they felt it was a better alternative than exchanging cash with a third party who might be infected with the coronavirus.
From that point onwards, UPI started to boom in India. Currently, over 16 billion transactions have taken place using UPI so far.
The Elephant in the Room: UPI 123Pay
Nearly 400 million in India were using simple feature phones in March 2022, and were not able to make use of UPI on their devices [7]. They could be using a feature phone for any reason: their work requires them to do so, or they find a smartphone’s functions complex when compared to the feature phones’ classic red and green buttons, etc. That is why NPCI decided that if they cannot get 400 million people to use a smartphone, then they’ll deliver an inclusive solution that works on their feature phones. Thus, the idea of UPI 123Pay was born.
Even though UPI 123Pay was developed with the future of feature phone payments in mind, the final product also supported smartphones with no or minimal Internet connection. UPI 123Pay offers four types of payment solutions: payment through IVR (Interactive Voice Response) numbers; missed calls; sound-based technology; and functionality implemented by OEMs [5].
Note: Not every bank supports each of these technologies. These technologies exist, are implemented, and at least one bank supports each of them.
Scope for Misleading the Market
With terms like “brain rot” gaining popularity, both teenagers and adults are seeking ways to incorporate digital detoxification into their daily routines. One way to achieve this is by switching to a dumbphone (feature phone) as a primary device. Though it brings certain complications, such as the lack of access to maps, video/music streaming services, and social media, it introduces an additional challenge in countries like India, where UPI has become an integral part of daily life.
Over the years, people have developed a strong reliance on UPI for processing P2P and P2M payments. Teenagers, in particular, use UPI for a wide range of purchases, from stationery and food to tickets and more. When they switch to a dumbphone, their daily activities are disrupted because, in today’s digital world, very few people carry cash. Addressing this pressing issue, some brands have launched feature phones that support P2P and P2M payments, claiming to come with a built-in “UPI app” that also supports the “scan & pay” feature [1, 2].
I had a disappointing experience trying one of these dumbphones. I discovered it didn’t come with a standard UPI app, but with the UPI 123Pay app, which allows payments to static QR codes (from which unique VPAs can be derived), but does not support payments through dynamic QR codes, which are commonly generated by Point of Sale devices at locations like buses, restaurants, gas stations, and shopping malls. The companies behind these devices claim they come with a built-in UPI app with a scan & pay feature, when actually their phones are equipped with a UPI 123Pay app that supports scan & pay for static QR codes. The PSP for UPI 123Pay on the feature phone I tested is Gupshup Pay.
Final Thoughts
UPI 123Pay is a promising solution for enabling instant payment systems on feature phones, even without requiring an active Internet connection. However, when using a feature phone for payments, it’s crucial to ensure that a speaker is present at the merchant’s location. The merchant receives an audible notification through the speaker when the payment is successful, meaning the user doesn’t need to show proof of payment on their phone.
While UPI 123Pay raises interesting questions about the functionality of the phone, in most cases, people are surprised by the ability to make payments with a dumbphone. However, some merchants without a speaker, not believing that the payment was processed, have caused me trouble by asking me to pay in cash, even though I had shown them the transaction status. This often happens because the majority of merchants at local stores do not know how to read or understand English, so they are unable to comprehend the transaction status message on the feature phone.
Anyone, regardless of age or nationality, should be mindful of their screen time and scrolling habits. If one can’t control it, then they have to cut it by switching to a feature phone. However, when companies make misleading claims about their devices, customers often have high expectations and feel disappointed. They may even feel their money has been wasted when they find themselves unable to make a payment, having left their cash at home, and are unable to pay for a service or item they wish to purchase.
References
- Amazon. n.d. “Nokia 110 with Built-in UPI App and Scan & Pay Feature, MP3 Player, Rear Camera, Long-Lasting Battery, and Voice Recorder | Charcoal.” Amazon.in. Accessed December 5, 2024. https://www.amazon.in/Nokia-110-Long-Lasting-Recorder-Charcoal/dp/B0C8HMXM7J
- Amazon. n.d. “HMD 110 Keypad Phone with Built-in Scan & Pay UPI App, Rear Camera, Long-Lasting Battery, Wireless FM Radio | Black.” Accessed December 5, 2024. https://www.amazon.in/HMD-Keypad-Long-Lasting-Battery-Wireless/dp/B0D5MBKCTT
- Kawale, A. UPI Emerges as Most Popular Method to Transact Digitally: RBI Report, Business Standard, May 30, 2023. https://www.business-standard.com/economy/news/upi-emerges-as-most-popular-method-to-transact-digitally-rbi-report-124053001664_1.html
- National Payments Corporation of India. n.d. “Roles and Responsibilities.” Accessed December 5, 2024. https://www.npci.org.in/what-we-do/upi/roles-responsibilities
- National Payments Corporation of India. n.d. “UPI 123Pay Product Overview.” Accessed December 5, 2024. https://www.npci.org.in/what-we-do/upi-123pay/product-overview
- National Payments Corporation of India. n.d. “UPI Product Statistics.” Accessed December 5, 2024. https://www.npci.org.in/what-we-do/upi/product-statistics
- PwC India. 2022. “The Indian Payments Handbook 2022-2027.” Accessed June 26, 2024. https://www.pwc.in/assets/pdfs/the-indian-payments-handbook-2022-2027.pdf
- Reserve Bank of India. 2023. “Innovations in Digital Payments: Challenges and Opportunities.” Speech by Shri Shaktikanta Das, Governor, Reserve Bank of India, June 8, 2023. https://www.rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=1422
Rithwik Burra is a student from India with interests in cryptography, quantum computing, cybersecurity, and computer networks. He can be reached at rburra@acm.org.
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