Well, you must have seen this ad on the internet. Take a look at this ad. Catch expert. Catch expert. Excuse me, one catch. 10,000. Only UPI. That’s why take a credit card on ROO. It’s only for UPI and it gives rewards. What a catch! Now after watching this ad, you might have thought that how can UPI be paid by a credit card?
Will they show a credit card in front of you and pay by UPI? What is this system? I will definitely explain this system to you. But I am telling you one thing. After reading this blog, you will definitely feel that India is moving ahead. Now how? Look behind main 2016, UPI was introduced. UPI stands for Unified Payment Interface. Now here, UPI in January 2017,45 lakh transactions were done through UPI.
You will be surprised to know that this January, 2023, it has crossed 804 crores. Now we are talking about April. I have data of March.870 crores transactions have been done in March. In just one month, through UPI. You might be thinking that it is so easy. You just have to scan and pay. You might think that when you have adopted this technology, you might think that it is very easy. But why is it not easy? For the whole world.
The US and China are afraid of UPI.I will explain to you how. After understanding this, you will understand that what a great technology UPI islets understand. A business of 1700 crores was happening through UPI in January 2017.It has crossed 13 lakh crores. The amount of transactions through UPI in January is 13 lakh crores.
It is huge. Are you able to think? If not, then read the blog. What was the problem before? Let’s understand how India has progressed. First of allies was launched in 1990s.ECS is still in use. The cash that is deducted from the bank, from home loan, car loan, is deducted through ECS.ECS stands for Electronic Clearing Service. It made it very easy. If someone has to pay a salary in bulk, then huge sheets were uploaded.
And at a time, if someone has to pay thousands of people’s salaries or transfer funds to a big public, then it was done through ECS. But after this, as the problem increased, a solution was added. It was identified that retail customers also face many challenges in transactions.
To solve their challenges, RBI gave instructions to Institute of Development and Research of Banking Technology to develop a system that people can transfer payments immediately and settlement happens on the same day.
It took time in ECS, but money reaches on the same day. Suppose you have taken a property from someone. You have to give him 1 crore. It will be deducted from your bank. It will be transferred to him. But you have to transfer on the same day. How will it happen? RTGS was introduced. It means real-time gross settlement. In a day, 1 crore will be deducted from your bank and will be transferred to another bank. It is not as easy as it seems.
I will tell you how it works. After that, NEFT was introduced. In 2005 and 2010, IMPS was introduced. But in 2016, the game changed. I will tell you why. People had a problem to transfer more than 2 lakhs. But people also had a problem to transfer less than 2 lakhs. If you want to transfer less than 2 lakhs, you have to do NEFT.
You must have seen the challenge in NEFT. You process NEFT now. Money comes after half an hour. Why does this happen? You can say that transactions do not go one by one. In bulk, the bank clears the payment at once. In every 30 minutes, the bulk files are being uploaded. Files means your transaction request. There are many such transactions.
The bank is processing payments every 30 minutes. It takes time in NEFT. Earlier, NEFT and RTGS were done in banking hours. But now it is 24 hours.24x7Now it is 24 hours. Settlement is getting easier. IMPS is called immediate payment service. You can transfer2 lakhs at once. Now it is 5 lakhs. This is the history of how our banking system is developing.
But now the problem is if you do NEFT, RTGS, and IMPS, most of the people’s accounts are deducted. The second problem is if you want to do IMPS, you have to add a beneficiary. It takes time to add a beneficiary. Whenever you add a beneficiary, you will see that the bank will depend on you. You can only do this much payment. Why not more? If you want to transfer 5 lakhs, you need a cooling period.
Why cooling period? Suppose someone hacked your net banking. What will happen if it is hacked? Now he will have control over your funds. He will put his beneficiary. Suppose he has 5 crores in his account. He will transfer 5 crores. Both the bank and RBI know this. If someone does this, he will not be able to transfer money immediately.
He has to put a limit. As soon as the beneficiary is added, you will get OTP.OTP is added after verification. So this system was considered safe till now. You will have a cooling period, time to check if it is right or wrong. Only then you will get the money.
So your money is very important for RBI.RBI is taking care of each and every customer. Now what is the game changing? RBI’s famous governor Raghu ram Rajang has contributed a lot to developing this system. He introduced UPI. Now what problems did UPI solve? The first problem was that if someone wants to transfer money, he has to add the beneficiary first.
After that, the money will be transferred. Now in UPI, if I go to buy vegetables or go shopping, I can scan the merchant with a scanner and transfer the money. It will be transferred to another account. It is so simple. It is so simple because it is done.
But you understand, look at this. It is a very complex system. It takes money. It is a system that is being implemented and it does not even take money. You will be surprised to know that this system is not available in the world except India. Neither US, China, or Russia have it.US always wants to be a superpower. It wants to be a superpower.
Its dollar is controlling the economy of the world. China has a very high GDP. We are accepting it. But even then, they do not have a smooth interface. Fed has launched Fed Now in the US. But they are not able to beat this technology. UPI has entered the Asian market. If you talk about Singapore, Thailand, Vietnam, Japan, and Dubai, these are the countries where Rupiahs been accepted. But very soon, neither China nor Swill accept it.
They will think that they have entered the technology. But they have to accept that UPI is great technology. National Payment Corporation of India has been working on NPCI.I have shown you an ad. Till now, you use a debit card. What is written on it? Visa, MasterCard, what are these companies? These are not Indian companies.
These are US companies. You have to understand the system. Then you will understand India’s masterstroke. I am taking some time. You have to understand. Whenever you have a credit card, it is issued by the bank. It can be Exist Bank, SGFC Bank, Kotak Bank, Induced Bank, any bank. When the bank issues a credit card, it needs service provider. What does that service provider do? I will try to explain it to you.
Here, there is trust that the company needs. But, one bank does not want to give the details of its client to another bank. For example, you have a Kotak credit card. You are paying to a merchant. His bank account is in SGFC. So, he does not want to give the details of his customer to this bank. An intermediary company comes in between. Visa or MasterCard. There is another thing. Let me explain it to you. This is a bank account. What does it do? It deducts money from the bank.
MasterCard takes a margin between. Now this margin is technically called MDR, Merchant Discount Rate. What happens is that the money you are paying 2%, it is divided into three places. Payment network like Visa and MasterCard, the bank that issued the credit but they don’t get the information about it. And this Visa and card and the bank where the terminal or device was installed, the money is divided into all three.
But Visa and MasterCard, you must be seeing that whenever you give your credit card, then many times you go to buy a mobile, you will be denied that we will not take payment from the credit card, otherwise we will charge 2% extra. Why will we charge extra? Because the merchant gets the money after deducting it. Because the merchant gets the money after deducting it, he does not take money from the credit card.
But in many places you will see that through the credit card, you make payments, then no one refuses you. Why doesn’t anyone refuse? Because companies think that money is coming, what difference will it make from the credit card? If someone is making a transaction of 100 rupees, then the merchant will get98. But the merchant thinks that you have given money in a restaurant, so he thinks that 98 has come.
So let the customer give money and you get rewards, which Visa and MasterCard give you. You get many rewards. So this rewarding structure is dominated by Visa and MasterCard, not only in India but in the whole world. Now see what India is doing. India wants to put a vote for them. India says that these are very profitable companies. Visa and MasterCard are making a lot of money and you understand the volume in India.
I told you first that in January, there is a volume of 13 lakh crores through UPI. Now more volume is already happening in Visa and MasterCard. A lot of money is going through them and the 2% in between is very dear to them. But our Riis understanding that thesis a very big amount. So here comes the master stock, Rupees, but still the acceptance of this is not very much.
Now the new credit card that they are promoting, that your bank will not give you a credit card, not only Visa, not only MasterCard, but also Rupees credit card. What will be the benefit of this? Now they will not get this 2%. Now Rupees will get this 2% and what is the biggest thing that Rupees is giving you, you understand this. You go to your simple Beam application. You can go towhee application and see your account.
You can see the accounts there, which are linked. If you have a Rupee credit card, then you can add it there too. And when you will make payment through Bhim application or UPI, then money will not be deducted from your account, but from the credit card. So there are many people in India, there is a big group who are dependent on credit card.
There are employees, salary comes late, they use credit card a lot, they also need rewards. So now you are doing a transaction through UPI, money will be deducted through credit card. But it will only happen through the Rupee credit card.
Visa credit card and Master credit card have not yet come with this feature. So this stroke of India, I am telling you genuinely, this time I literally felt that India is dominating here. Because if you can dominate money, then you can become a world power, you can become a superpower.
But simple technology like UPI, today no one has it in the whole world. And if the world starts accepting this technology, then we will have a lot of control. And this will help us a lot in becoming a superpower in India.
