“A STUDY ON ROLE OF UPI IN INDIAN BANKING SECTOR”

Project Report submitted in partial fulfillment of the requirements for the

award of the Degree of
MASTER OF BUSINESS ADMINISTRATION
of
BENGALURU CITY UNIVERSITY

By
Devika Biju
Reg. No. MB202412

Under the guidance of

Prof. Ajay Krishna A
Assistant Professor

RAMAIAH COLLEGE OF ARTS, SCIENCE

AND COMMERCE

Bengaluru City University

 DECLARATION

I hereby declare that “A STUDY ON ROLE OF UPI IN INDIAN BANKING SECTOR” is the
result of the project work carried out by me under the guidance of Prof. Ajay Krishna A in partial
fulfillment for the award of Master’s Degree in Business Administration by Bengaluru City
University.
I also declare that this project is the outcome of my own efforts and that it has not been submitted
to any other University or Institute for the award of any other degree or Diploma or Certificate.

Place: Bangalore Name: Devika Biju

Date: 27.01.2022 Register Number: MB202412

 ACKNOWLEDGEMENT

Any acknowledgement, be it scholastic or otherwise does not depend solely on the individual efforts but
on the guidance, encouragement and cooperation of intellectual, elders and friends. A number of
personalities, in their own capacities have helped me in carrying out this project work. I would like to
take this opportunity to thank them all. I am grateful to our MS Ramaiah College of Arts, Science and
Commerce for having provided us facilities, which has made this project a success. I express my sincere
gratitude to our Dean, Department of Management Studies, Dr. Bindu Nambiar for providing a congenial
environment and surrounding to work in, who has always been a great source of inspiration. Also, I
would like to thank Mr. Ajay Krishna A, Assistant Professor, Department of Management Studies,
MSRCASC, who also have helped me in various stages of project and making this project a success. I
would like to thank other faculty members and my fellow classmates, for all the support during the
project tenure. The incredible encouragement, moral support and motivation were very helpful, which
was the key to this interesting project endeavor.

DEVIKA BIJU
MB202412
 DEPARTMENT OF MANAGEMENT STUDIES

GUIDE CERTIFICATE

This is to certify that the Project Report on “A study on role of UPI in Indian banking
sector”submitted by Devika Biju, MB202412 to Bengaluru City University, Bangalore for
the award of MASTER OF BUSINESS ADMINISTRATION is record of work carried out
by him / her under my guidance.

Place: Bangalore Mr. Ajay Krishna A

Date:
 DEPARTMENT OF MANAGEMENT STUDIES

CERTIFICATE OF ORIGINALITY

This is to certify that the Project report entitled “A study on role of UPI in Indian banking
sector” is an original work of Ms. Devika Biju; bearing University Register Number
MB202412 and is being submitted in partial fulfillment for the award of the Master’s Degree
in Business Administration of Bengaluru City University. The report has not been submitted
earlier either to this University /Institution for the fulfillment of the requirement of any course
of study. Ms. Devika Biju is guided by Mr. Ajay Krishna A who is the Faculty Guide as per
the regulations of Bengaluru City University.

Signature of Faculty Guide Signature of the Dean

Date Date
 DEPARTMENT OF MANAGEMENT STUDIES

CERTIFICATE OF PLAGIARISM

Name of Student: Devika Biju

Registration number: MB202412
Title of the Project: A study on role of UPI in Indian banking sector
Name of the guide: Mr. Ajay Krishna A
Similar Content (%)
Identified : 18%
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TURN IT IN : 1747035566

The project report has been checked using TURNITIN anti-plagiarism software and
found within limits as per plagiarism policy and instructions issued by the Bengaluru
City University / CBSMS.

We have verified contents of the dissertation report, as summarized above and

certified that the statements made above are true to the best of our knowledge and
belief

Signature of the Dean

Date:
 CONTENTS

CHAPTER TITLE PAGE NO.

NO.
Title page

Declaration

Index

Chapter 1 Introduction 1-13

Chapter 2 Methodology 14-20
Chapter 3 SWOC analysis 21-29
Chapter 4 Outcomes of study 30-31
Chapter 5 Conclusions 32-34
 CHAPTER 1

INTRODUCTION
INTRODUCTION

With the introduction of the Unified Payment Interface, India has made a significant
step toward becoming a cashless economy (UPI). You can now use your smartphone as a virtual
debit card with the new payment mechanism. It is also possible to send and receive money in
real time. As a result, UPI is a single system that provides together a variety of banking features
and services under one roof. To transfer and receive money, you only need your UPI ID and
PIN. A cellphone number or a virtual payment address can be used to make real-time bank-to-
bank payments (UPI ID).

UPI ID is a unique identification for a bank account that is used to transfer and receive funds.
The UPI PIN is a four-digit personal identification number that must be input in order to approve
a money transfer via UPI. The PIN can be chosen by the account holder. The newly released
UPI is expected to make mobile payments easier. UPI is a payment architecture developed by
the Reserve Bank of India with a set of standard app APIs to enable next- generation online
instant payments by utilizing trends such as growing Smartphone penetration,increased app
downloads, and universal data and internet access.

The National Payments Corporation of India (NPCI), in collaboration with the Reserve Bank
of India and the Indian Banks Association, has launched the Unified Payments Interface (UPI)
(IBA). NPCI, which allows multiple banks to interconnect and transfer funds, is the company
that manages RuPay payments infrastructure, which is equivalent to Visa and MasterCard. The
Immediate Payments Service (IMPS) is another NPCI project. The enhanced version of IMPS
is known as UPI.

Using VPA (virtual payment address), by downloading an android app, any smartphone user
with a UPI-partnered bank's current or savings account can make P2M (peer-to-merchant) and
P2P (peer-to-peer) payments. The advantage of this kind of payment is that the users need not
remember account type, receiver’s account number, bank name and IFSC. The payments which
were very complex before have turned into very easy by just knowing the mobile phone number
registered with the bank account, or UPI ID of the receiver. UPI service supported apps can be
used to generate UPI ID by stating the information about the bank account in the app. The UPI
ID format begins with the mobile number, followed by the @ symbol, then the app name at the

2
end. If your phone number is xxxxxxxx43 and you use the Paytm app, your UPI ID may be
'xxxxxxxx43@paytm'. The application will send an OTP to the registered cellphone number for
authorization. A pin has to be created for further transactions upon submitting the OTP back to
the app. Once the registration process is completed, the user can send or receive money from
any of the contacts using their mobile number.

This payment option ensures the user's security by not providing sensitive information such as
the IFSC code or bank account number. As a result, the consumer is not required to provide any
sensitive information. It eliminates the need to enter card information such as the number, CVV
code, and expiration date.

Tampering UPI transactions is not an easy process as it uses a highly secure encryption format.
About Rs.8,000 crore worth transactions are handled by NPCI’s IMPS network every day. An
exponential increase is expected in the number of transactions that happen every day using UPI
technology. It ensures a secure transaction using a two-factor authentication method. However,
UPI PIN will be used in the place of OTP for validation.

Vendors often register themselves with names we do not know. It may be their real name but
the customer will never know. The list of merchants flooding the screen may confuse the user.
The real seller does not fit the written algorithm to find merchants nearby. Vendor and Customer
open their apps and use a peer-to-peer sharing approach to communicate. But the vendors we
focus on will not prefer to include themselves in the program.

Increased internet usage, mobile access and a government program such as Digital India gave
birth to UPI (Unified Payment Interface), a virtual interface over digital wallet. Unified
Payment Interface (UPI) is a program that enables multiple bank accounts in one mobile
application (for any participating bank). It allows seamless transfers without CVV numbers
which is why it is so secure. Several consumer transactions are conducted at the point of sale
(POS) on a daily basis.

The last decade has seen tremendous growth in the use of the internet and mobile phones in
India. UPI has become a trendsetter in our country aimed at digital development and a
prosperous economy especially after the democratic process initiated by our Prime Minister in

3
2016. Increased internet usage, mobile access and a government program such as Digital India
gave birth to UPI (Unified Payment Interface), a virtual interface over digital wallet. Unified
Payment Interface (UPI) is a program that enables multiple bank accounts in one mobile
application (for any participating bank). It allows seamless transfers without CVV numbers
which is why it is so secure. Several consumer transactions are conducted at the point of sale
(POS) on a daily basis. The way to pay for most of these purchases is because an online bank
or mobile banking system uses a smart phone and a non-cash payment mode. The paper
attempts to understand the functionality of UPI vs Digital wallets and measures customer
perception and acceptance of UPI-based applications such as BHIM. It compares the payment
method of UPI with other types of digital services

UPI is the largest payment system in the country in terms of level of transaction. Due to this the
government of India gives maximum support for this payment system. The government has
abolished the two-year free policy that it has adopted since December 2019. Under the
announced plan, banks installing swipe card machines or QR codes in stores will be promoted
by the government by paying a percentage of the amount of RuPay transactions and BHIM-UPI
low payment methods, with an estimated expenditure of Rs 1,300 crore for one year from April
1, 2021.

4
HISTORY

Money was first introduced before the dawn of written history. As a result, every account about
the origins of money is mostly dependent on logic and reasoning. Many things were sold in
mediaeval markets that may be classified as commerce, according to important evidence.
Throughout history, gold and silver have been the most widely used currencies. The word for
silver is still strongly tied to the word for money in several languages, including Spanish,
French, Hebrew, and Italian.

The Song Dynasty introduced the paper coin to China in the beginning of the 11th century.
Local stories of paper currency sparked the development of paper currency in the seventh
century.

In the 16th century, goldsmiths in England were skilled artisans, money changers, and lenders.
Artists were the first to keep deposits with the obvious goal of distributing them in the early
17th century, but they're not the first one to become financial counsellors. Traders and
merchants had amassed vast sums of gold, which they had given to the Royal Mint for security.
As a forced loan, King Charles I confiscated private gold deposited in the hamlet in 1640. (to
be repaid later). Merchants subsequently decided to keep their gold from London gold miners
who worked out of their homes and charged a fee for the process. Goldsmiths produced receipts
proving the value and quality of the metal they were carrying as bail in order to guarantee each
deposit of precious metals. There's no way these receipts exist. Promise notes are issued on
traditional and/or legal loans that have been a loan to the goldsmith, that is, the depositor
expressly allows the goldsmith to use the funds for any purpose, including the development of
his clients; Promise notes are issued on traditional and/or legal loans that have been a loan to
the goldsmith, that is, the account holder explicitly allows the goldsmith to use the funds for
any purpose, including the development of his clients. The goldsmith doesn't really pay any
money for these deposits, nor does he pay the interest on them. This was the first approach to
save money in the bank since collateral papers were paid as required and loans (loan) to the
goldsmith's customers were reimbursed over a lengthy amount of time. Promise notes are being
developed into a specific tool that may be delivered as a safe and convenient approach to help
a goldsmith pay his mortgage. As a result, gold miners might use a guarantee letter or a bank

5
account to borrow gold coins. President Richard Nixon of the United States announced in 1971
that the US dollar will no long be convertible into gold. In what is termed as Nixon shock, the
move particular way the Bretton Woods programme by removing its key component. Since
then, the US dollar has been flying around the form of free currencies, like all other world
currencies. Furthermore, virtual debt, rather than real money, increasingly dominates
international, national, and local currencies.

UPI is the largest payment system in the country in terms of level of transaction. Due to this the
government of India gives maximum support for this payment system. The government has
abolished the two-year free policy that it has adopted since December 2019. Under the
announced plan, banks installing swipe card machines or QR codes in stores will be promoted
by the government by paying a percentage of the amount of RuPay transactions and BHIM-UPI
low payment methods, with an estimated expenditure of Rs 1,300 crore for one year from April
1, 2021.

• GOOGLE PAY

Google Pay is a digital wallet and online payment developed by Google to facilitate in-app,
online, and in-person transactions on portable devices, allowing users to pay using their
Android, tablets, or watches. An iOS smartphone can also be used in the Uk And India, however
it has limited capabilities. Coupons, passports, compass identity cards, vehicle keys, event
tickets, movie tickets, public transit tickets, prepaid cards, health records, and loyalty cards are
all supported by the service.

This feature was first introduced at Google I/O 2015 under the name Android Pay. Android Pay
has been monitored and is based on the Google Wallet foundation, which was published in
2011. It also made use of technology from Softcard, a network firm sponsored by Google, which
bought a key position in February 2015. The service was interoperable with 70% of Android
smartphones at the time of its launch, and it was accepted by over 700,000 vendors. In Gmail,
for example, Google Wallet still leverages Google Play Store transactions and other peer-to-
peer payments. The service's previous logo, Android Pay.

6
In Silicon Valley, Google ran a public trial for an analogous smartphone app called Hands Free
in 2016. The customer is not required to produce his or her phone or credit card in order to
participate in this service. Instead, the customer says they want to "pay with Google" and
provides the clerk their initial names, which the system confirms with a pre-uploaded
photograph. Only if the local system shows that the customer is close to a connected store will
the phone allow payment.

Google launched Tez, a payment service in India that uses the Unified Payments Interface, on
September 18, 2017. Tez was rebranded as Google Pay on August 28, 2018. Google stated on
January 8, 2018, that Google Wallet would be merged with Android Pay and that the entire
service would be called Google Pay.

• PHONE PE

PhonePe is an Indian online payments and financial sectors startup with headquarters in
Bangalore. Sameer Nigam, Rahul Chari, and Burzin Engineer founded PhonePe in December
2015. In August 2016, the PhonePe app, which is based on the Unified Payments Interface
(UPI), went online.

More than 11 Indian languages are supported by the PhonePe app. Users can use PhonePe to
send and receive money, recharge their phones, DTH, data cards, pay utility bills, pay at stores,
invest in tax savings, liquidity, purchase insurance, shared funds, and gold, among other things.
In addition, PhonePe's Change forum allows users to book Ola rides, buy for Redbus tickets,
and book flights and accommodation using Goibibo.

PhonePe is accepted as a payment method in over 17.5 million offline and online establishments
in India, including food, travel, shopping, medical, cinema tickets, and more. By June 2018, the
app had surpassed 100 million users, and by December 2019, it had surpassed 5 billion sales. It
now has more than 280 million users. In January 2020, the firm debuted the PhonePe ATM.
Customers may withdraw real-time cash from nearby Kirana stores using the PhonePe ATM.

With Authorization Number: 75/2014 dated August 22, 2014, PhonePe has been granted
permission by the Reserve Bank of India to issue and run the Partially Closed Prepaid Prepaid
Payment System. On August 26, 2014, FxMart acquired its operating licence. In December of

7
2015, PhonePe became a legal entity. The company was acquired by Flipkart in April 2016,
and the FxMart licence was handed to PhonePe and renamed as a PhonePe wallet as part of the
Flipkart transaction. Sameer Nigam, the company's creator, has been appointed CEO. The
startup teamed with Yes Bank in August 2016 to establish a UPI-based mobile payment system
driven on a government-sponsored UPI platform.

More than 10 million people have downloaded the app within three months of its release.
PhonePe was also the first Indian payment app to reach the 50 million download mark on the
Google Play Store in 2018. In August 2017, the PhonePe app overtook BHIM as the market
leader in UPI commerce.

• AMAZON PAY

Amazon Pay is the company's online payment processing service. Amazon Pay, which was
launched in 2007, uses Amazon's consumer domain and focuses on allowing customers to pay
using their Amazon accounts on third-party merchant websites. This service is offered in
Austria, Belgium, Cyprus, Denmark, France, Germany, Hungary, India, Republic of Ireland,
Italy, Japan, Luxembourg, Netherlands, Portugal, Spain, Sweden, Switzerland, United
Kingdom, and all other countries as of March 2021.

In 2019, Amazon Pay and Worldpay established a cooperation, allowing Worldpay clients to
use Amazon Pay as part of the same integration. Azay Pay allows you to buy goods and services
on websites and mobile apps using the addresses and payment methods registered in your -
Amazon account, such as credit cards, direct debit accounts, or in India, the UnifiePayments
Interface (UPI). Amazon Express is a payment processing solution for websites that have simple
e-commerce applications. Built on Amazon Pay but without the necessity for complete e-
commerce connection, this button may be copied and pasted into a website or inserted with a
WordPress plug-in. It's best for retailers who sell a limited number of products and only one
item each order.

The security of our data is a major concern. Transaction security is concerned with giving more
privacy in transactions to every individual buyer and sellers and protecting them from any third

8
party attack. In rural areas there are a lot of illiterate people without any knowledge about the
digital system. Providing awareness about the digital payment system to the total population of
our country is a very difficult task to achieve.In future there is a chance of levy of tax or GST
for UPI services. This will discourage people from using UPI platforms. The rules and
regulations should be customer friendly.

Vendors often register themselves with names we do not know. It may be their real name but
the customer will never know. The list of merchants flooding the screen may confuse the user.
The real seller does not fit the written algorithm to find merchants nearby. Vendor and Customer
open their apps and use a peer-to-peer sharing approach to communicate. But the vendors we
focus on will not prefer to include themselves in the program.

UPI is the largest payment system in the country in terms of level of transaction. Due to this the
government of India gives maximum support for this payment system. The government has
abolished the two-year free policy that it has adopted since December 2019. Under the
announced plan, banks installing swipe card machines or QR codes in stores will be promoted
by the government by paying a percentage of the amount of RuPay transactions and BHIM-UPI
low payment methods, with an estimated expenditure of Rs 1,300 crore for one year from April
1, 2021.

9
Banks that support UPI

● · State Bank of India (SBI Pay)

● · ICICI Bank (iMobile)

● · HDFC Bank (HDFC Bank Mobile Banking)

● · Axis Bank (Axis Pay)

● · Bank of Maharashtra (MahaUPI)

● · United Bank of India (United UPI)

● · Vijaya Bank (Vijaya UPI)

● · Union Bank of India (Union Bank UPI)

● · Federal Bank (Lotza)

● · UCO Bank (UCO-UPI)

● · Yes Bank (Yes Pay)

● · Karnataka Bank (KBL Smartz)

● · Punjab National Bank (PNB UPI)

● · Bank of Baroda (Baroda UPI)

● · South Indian Bank (SIB M-Pay)

UPI payments apps such as PhonePe, FreeCharge, Google Pay, Mobikwik, and others are very
common in everyday life. Before you begin transactions, you need to verify your bank account
information to generate UPI ID on the app.

10
Scope of UPI

Users of UPI member banks have access to an instant, twenty-four-hour (24x7) interbank
electronic fund transfer and/or fund collection service through the UPI service. Users will be
able to create a Virtual Payment Address ("VPA") and initiate transactions through the BHIM
App.

Objectives of this study

● To study the effect of UPI on the increasing clients in banks·

● To know the importance of UPI during this pandemic.

● To know the implementation of UPI paved the way for the growth of the banking
industry.

Statement of the problem

UPI payment has made online transfers easier. Payment via UPI is now becoming standard and
widely used in all industries. It has led many retailers to accept digital payments. For all the
benefits that UPI brings, there are some difficulties for end users.

A transaction between a vendor and customer happens in 3 steps –

1. Identification of the vendor

2. Invoice Generation
3. Payment Confirmation

11
Vendors often register themselves with names we do not know. It may be their real name but
the customer will never know. The list of merchants flooding the screen may confuse the user.
The real seller does not fit the written algorithm to find merchants nearby. Vendor and Customer
open their apps and use a peer-to-peer sharing approach to communicate. But the vendors we
focus on will not prefer to include themselves in the program.

The last decade has seen tremendous growth in the use of the internet and mobile phones in
India. UPI has become a trendsetter in our country aimed at digital development and a
prosperous economy especially after the democratic process initiated by our Prime Minister in
2016. Increased internet usage, mobile access and a government program such as Digital India
gave birth to UPI (Unified Payment Interface), a virtual interface over digital wallet. Unified
Payment Interface (UPI) is a program that enables multiple bank accounts in one mobile
application (for any participating bank). It allows seamless transfers without CVV numbers
which is why it is so secure. Several consumer transactions are conducted at the point of sale
(POS) on a daily basis. The way to pay for most of these purchases is because an online bank
or mobile banking system uses a smart phone and a non-cash payment mode. The paper
attempts to understand the functionality of UPI vs Digital wallets and measures customer
perception and acceptance of UPI-based applications such as BHIM. It compares the payment
method of UPI with other types of digital services

12
Needs and Relevance of the study

With the introduction of the UPI, India has made a significant step toward becoming a cashless
economy. You may now use your smartphone as a virtual debit card thanks to a new payment
methodology. It has also made instant money sending and receiving possible. The QR code
approach has completely eliminated the use of digital wallets. UPI stands for Unified Payments
Interface, which simplifies e-banking and online payment systems. It allows you to send money
from your phone to your bank account in real-time. We can use it for a variety of things, such
as paying our utility bills or shopping at the local supermarket. You won't need to carry cash
because the UPI system functions as a digital wallet. UPI also avoids the risk of keeping cash
on hand all of the time. When sending money, there is no need to submit the recipient's bank
account information. We can also collect money by sharing your UPI ID, which is typically
your bank's registered mobile phone number. UPI allows money transfer from one bank account
to another instantly via one’s mobile phone. App payments can be made on mobile devices
only. UPI works on a 24x7 basis for transfer of money.

● · Rewards and cashback.

● · Available 24x7 (Transfers can be made at any time including weekends).

● · Daily transaction limit Rs.1,00,000.

● · Merges various banking services under one umbrella.

● · Privacy- share only virtual address

13
 CHAPTER 2

METHODOLOGY
TITLE OF THE STUDY:

“ROLE OF UPI IN INDIAN BANKING SECTOR”

METHODOLOGY OF RESEARCH

The methodology section focuses on study design. Research methodology is the exact processes
or procedures used to choose, identify, process, and analyse information about a topic. The
study the impact of UPI on customers discussed during every situation and their satisfaction
level and effect of UPI in the Indian Banking System. The present study is based on secondary
data and deals with qualitative data. In secondary data it consists of various books, newspapers,
research papers, journals, reports of diversified agencies and web contents.

RESEARCH DESIGN

Research designs are plans which specify how data should be interpreted and collected.
Research outline, blueprint are the different names it is also known. Research design is set by
the matter, its nature and data.

EXPLORATORY RESEARCH

The way toward investigating the difficult that has not been contemplated or totally investigated
previously is exploratory examination. Examination by exploratory sort is commonly prompted
to have prevalent comprehension of the recent concern, anyway customarily doesn't speedy an
unequivocal result.

Analysts use the same method when endeavoring to get insight with a current wonder and obtain
new information to shape a well definite issue. Exploratory starts reliant on an overall thoughts
and consequences of the exploration are used to find related issues with the subject of the
examination.

In exploratory assessment, the pattern of the assessment shifts as exhibited by the assessment
of latest data or understanding. Also, suggested as interpretative assessment or grounded

15
speculation approach, the delayed consequences of this investigation offer reactions to
questions like what, how and why.

REVIEW OF LITERATURE

A review article is a sort of literature review. It is a research work that includes current
information, major findings, and hypothetical and methodological contributions to a certain
field. The data has been taken from different literature and various sources have been referred
to, for this piece of work. The sources which referred to all provided well versed information
about the subject.

1. “DIGITAL PAYMENT SERVICES IN INDIA”- MAHESH A, GANESH BHAT-

“According to their research, UPI has experienced significant growth in recent years
as a result of customers' preference for contactless payments over other methods. Study
shows that the growth of digital payments has increased significantly, mainly on the
UPI platform in the retail payment sector. After demonetization and the digital India
efforts, the Indian banking sector is working hard to popularise digital payments.The
"National Payment Corporation of India (NPCI)" launched the "Unified Payment
Interface (UPI)" to support digital payments, which is an outstanding development for
providing digital payment services for everyone. The proliferation of smartphones,
technological advancements, and effective internet connections have resulted in the
use of mobile payment services by smartphone users, financial institutions, and
especially banks.”

16
2. “REVIEW ON ADOPTION OF DIGITAL PAYEMENT SYSTEM” - SHAILZA,
MADHULIKA. P. SARKAR – “In this work, the authors examine the existing
literature on digital payment systems. The study aims to analyze how far the Digital
Payment System has progressed in terms of acceptance. Also discussed are the
elements that influence customers' attitudes on the use of digital payment systems. The
report does a review of the literature on electronic payment systems. There have been
reviews of both conceptual and empirical works. To stay up with the fast-growing
cashless global economy, economic digitization has become critical and inescapable.
In line with other developed and developing countries, India is attempting to transition
from a cash-based economy to a cashless one. Consumers pay with instruments other
than cash in the digital payments system, such as debit/credit cards, digital wallets, net
banking, and mobile payment applications.”

3. “UPI-REDEFINING DIGITAL PAYMENTS-A CRITICAL REVIEW”- ATUL

GUPTA- “UPI is being progressively adopted by the masses, and it is certainly the
game changer in the digital payments business because of the level of convenience and
low-cost services it delivers, according to a report. UPI will eventually make
smartphones the major payment device, ushering in a massive shift in the digital
payments industry. Increased internet usage, mobile access and a government program
such as Digital India gave birth to UPI (Unified Payment Interface), a virtual interface
over digital wallet. Unified Payment Interface (UPI) is a program that enables multiple
bank accounts in one mobile application (for any participating bank). It allowsseamless
transfers without CVV numbers which is why it is so secure. Several consumer
transactions are conducted at the point of sale (POS) on a daily basis.”

17
 4. “STUDY OF CONSUMER PERCEPTION TOWARDS DIGITAL PAYMENT MODE
IN INDIA”-APARNA J VARMA, RENJITH P V – “The study's goals are to better
understand the notion of digital payment and the various modalities of payment, as
well as customers' opinions of online and digital payments and the security of these
transactions. They discovered that in today's world, the increasing use of cashless
payments has nearly completely replaced actual currency transactions. Though there
are some restrictions, particularly in terms of privacy and security, it all depends on
how consumers, banks, and other organizations utilize and handle the data.”

5. “STUDY OF UPI/BHIM PAYMENT SYSTEM IN INDIA”-

“Dr. Veena R Humbi Dinesh M Kolte - As per the above study it is shown that students
are extensively using the 3rd party UPI/BHIM on mobile phones. It is a convenient
payment mechanism for students and can be a very valuable tool for online transactions
with students. This would assist students in making digital payments without the use
of any complicated mechanisms, as well as promote the economy of the country
through transparency. Recharge, bill payment, rent, bank balance, and other online
transaction choices are available on the phone. Because third-party apps are more
popular among students, banks and NPCI must promote the native BHIM App.”

6. “A Study on Factors Influencing Consumer Intention to Use UPI-Based Payment Apps

in Indian Perspective”

“Mobile payment refers to a system in which we conduct financial transactions over the
internet utilising gadgets such as cellphones, trading machines, and other electronic
devices rather than cash. One of the most popular types of mobile payment systems is a
mobile wallet, sometimes known as a digital wallet. Mobile wallets and customer intents
to use them have been the subject of a lot of research. However, UPI-based Payment
Apps such as BHIM, PhonePe, and Google Pay are gradually replacing mobile wallets,
and little is known about the reasons of this growth. In light of this void, our research

18
 aims to better understand the consumer's ethical motivations in respect to UPI-based
payment systems. The concept model was provided using the enlarged framework of
UTAUT2 based on the literature review. A pan-India poll with 224 valid responses was
used to conduct this test. In order to understand the impact of parameters such as
Duration, Effort Expectation, Social Influence, Assign Conditions, Hedonic Promotion,
Price, and User Acquisition on the use of UPI-based payment applications, the State
employs ordered drop-down models. To further grasp the customer acceptance notion,
items like trust, visual security, and innovation are incorporated. The aim of the activity
was found to be closely related to Performance Expectancy, Price, Trust, and Perceived
Security. This is one of the first studies in India to completely model and explore the
elements that influence UPI consumer acceptability.

7. “A Study on Customer Perception Towards UPI and its Growing Influence in The
Realm of Digital Payments: An Empirical Study- Radhika arora”

“The last decade has seen tremendous growth in the use of the internet and mobile
phones in India. UPI has become a trendsetter in our country aimed at digital
development and a prosperous economy especially after the democratic process initiated
by our Prime Minister in 2016. Increased internet usage, mobile access and a
government program such as Digital India gave birth to UPI (Unified Payment
Interface), a virtual interface over digital wallet. Unified Payment Interface (UPI) is a
program that enables multiple bank accounts in one mobile application (for any
participating bank). It allows seamless transfers without CVV numbers which is why it
is so secure. Several consumer transactions are conducted at the point of sale (POS) on
a daily basis. The way to pay for most of these purchases is because an online bank or
mobile banking system uses a smart phone and a non-cash payment mode. The paper
attempts to understand the functionality of UPI vs Digital wallets and measures
customer perception and acceptance of UPI-based applications such as BHIM. It
compares the payment method of UPI with other types of digital services.”

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8. “UPI-REDEFINING DIGITAL PAYMENTS-A CRITICAL REVIEW”- ATUL
GUPTA-
“UPI is being progressively adopted by the masses, and it is certainly the game changer in the
digital payments business because of the level of convenience and low-cost services it delivers,
according to a report. UPI will eventually make smartphones the major payment device,
ushering in a massive shift in the digital payments industry. Increased internet usage, mobile
access and a government program such as Digital India gave birth to UPI (Unified Payment
Interface), a virtual interface over digital wallet. Unified Payment Interface (UPI) is a program
that enables multiple bank accounts in one mobile application (for any participating bank). It
allows seamless transfers without CVV numbers which is why it is so secure. Several consumer
transactions are conducted at the point of sale (POS) on a daily basis.”

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 CHAPTER 3

SWOC OF RESEARCH:

STRENGTH, WEAKNESS, OPPORTUNITY AND

CHALLENGES ANALYSIS
 SWOC ANALYSIS

SWOC analysis is a strategic planning method that is used to assess the strengths, weaknesses,
opportunities, and challenges that are present in a project, a commercial endeavour, or any other
circumstance that necessitates a choice. It will draw out the strength or the plus points of a
company. The weakness part will allow one to find in which all part improvements should be
made. SWOC analysis helps finding the opportunities to be explored. It will also help in
identifying the challenges the firm is going to face. It helps in avoiding future threats by
exploring the existing opportunities. It allows us to identify the critical factors which will affect
the firm or a decision.

In this chapter the observation on the factors influencing the role of UPI in the Indian banking
sector is being classified under the four headings. SWOC thus helps in the proper analysis of
the problem and helps in finding a solution for the problem. Strengths and weaknesses are the
internal analysis while threats and opportunities are the external analysis. SWOC analysis helps
in finding out what we are good at or what are the positive sides of a problem and also helps us
finding out what are the challenges or problems we are facing. This can help us improve in the
part which we are not aware about by giving a proper understanding about the topic.

The SWOC analysis is a management technique that is used to determine a company's strengths,
weaknesses, opportunities, and challenges. A company's strength is a resource or capacity that
it may put to good use in order to achieve its goals. What all are the benefits of UPI over other
transaction modes is being discussed as the strength of the study. Weaknesses are those
struggles faced by the industry in its growth and marketing of products. Opportunities are often
external and it provides ways for the UPI to improve or grow successfully in the future.
Challenges are similar to threats but have the chance of being overcome. Threats are those
factors which can damage a firm but challenges often already exist and can be handled to

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overcome the situation. This is the final step in the SWOC analysis. In this study, the SWOC
analysis is employed to identify the SWOC factors relating to the role of UPI in the Indian
banking sector.

STRENGTH

• Strong government backing

UPI is the largest payment system in the country in terms of level of transaction. Due to this
the government of India gives maximum support for this payment system. The government has
abolished the two-year free policy that it has adopted since December 2019. Under the
announced plan, banks installing swipe card machines or QR codes in stores will be promoted
by the government by paying a percentage of the amount of RuPay transactions and BHIM-UPI
low payment methods, with an estimated expenditure of Rs 1,300 crore for one year from April
1, 2021.

• Regulatory Support

The National Payments Corporation of India (NPCI), which is regulated by the Reserve Bank
of India, oversees the UPI. The National Payments Corporation of India (NPCI), a Reserve
Bank of India (RBI) programme and the Indian Banks' Association (IBA) under the Payment
and Settlement Systems Act, 2007, by creating a Strong Pay and Payment Infrastructure in
India, is an umbrella organisation for payment of shopping and payment systems in India.

The NPCI has been merged as a "Non-Profit" Company under the requirements of Section 25
of the Companies Act 1956 (currently Section 8 of the Companies Act 2013), with the goal of
offering the whole Bank of India physical and electronic payment system and payment systems.
The company focuses on using technology to improve the efficiency of in-store payment
systems and broaden access to payment systems.

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The ten main promotional banks are State Bank of India, Punjab National Bank, Canara Bank,
Baroda Bank, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citibank NA and
HSBC. In 2016 share ownership was largely supported by 56 member banks to include
additional banks representing all sectors. The NPCI sets out the rules, guidelines, guidelines,
and relevant roles, obligations and liabilities of PSPs and TPAP, in relation to UPI. This
includes transaction processing and resolution, dispute management and removal restrictions to
resolve. NPCI provides a secure, secure and efficient UPI system and network.

● · Major facilitator of financial inclusion in the country

In India, where the payment infrastructure for receiving digital payments is inadequate, UPI
allows even the smallest entrepreneur to start earning digital payments without the requirement
for a POS equipment. UPI has made payments easier and more transparent for all parties
involved by eliminating the need for trade groups to know complex payment information. The
UPI runs in a stable and secure environment with many security features that make it safer than
any other payment system currently in use. Biometric authentication for UPI will not only make
transactions more secure, but it will also signal a shift toward integrating next-generation
technologies with existing payment systems. In India, UPI has the potential to be a major
investment facilitator, allowing a large number of people to participate in the digital economy.

• Simplified and multiple payment mechanism

UPI allows you to use your cell phone as a premium the way to all transactions, including P2P,
P2B, and B2P. Multiple identifiers, such as a custom virtual payment address (VPA),
AADHAR 12-character number provided by Unique Identification Authority of India (UIDAI)
or Bank Account Number, and the Indian Financial System (IFSC) code can be used to make
payments. In UPI 2.0, users can add more bank accounts, including overdraft accounts, and you

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have created an unlimited number of visible payments Addresses via mobile applications
provided by PSPs

WEAKNESS

• Absence of infrastructure, laws and regulation in case of fraud

The worst thing about using a UPI is the banks don’t help customers with safety issues. Most
scammers these days are asking for money to be transferred through the UPI. Customers should
be careful enough when making a transaction with a UPI.

• Lack of E-literacy

E-literate is a level of human ability and understanding in the use of information technology.
E-literacy covers a set of skills needed to make the best use of available materials, tools, and
resources. It refers to the digital and technical skills needed to navigate an online learning
environment. This is the basic need for any digital system. Most of the population comes under
this group.

• There is a transaction limit

The maximum transferable amount is Rs.2, 00,000. As a result, it becomes limited to the
transaction payment category.

• Merchant acceptance and Unreliable internet connection in rural areas

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In rural areas there are a lot of illiterate people without any knowledge about the digital
system. For that reason, many merchants or sellers does not convert to digital mode. Also, the
strength of internet connection will not be sufficient to complete the digital transaction is a
problem in rural areas.

• Inertia to adoption due to tax evasion or other security concerns.

• The two- fa c t o r authentication like mobile number and PIN

verification mayadversely affect the users.

OPPORTUNITIES

• Internet penetration

India's internet penetration rate increased to about 45 percent by 2021, up from about 4 percentin
2007. Although these figures appear low, it meant that about half of the 1.37 billion people had
access to the internet that year. This also ranks the country second in the world in terms ofactive
internet users.

• Prime Minister's Jhan Dhan Yojana (PMJDY)

Program by Prime Minister Jhan Dhan Yojana (PMJDY) as a fundraiser strategy related to
opening bank accounts among poor families especially those who engaged in casual labor
activities and illiteracy. This expanded the base of account holders.

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 ● Strong banking network and cashless economy

Strong Bank network, with the launch of Digital India in particular after demonetization, pushed
the country into a cashless economy. Vision 2021 RBI aims to build a strong digital payment
ecosystem and switch to a cashless economy. The government wants to reduce the use of real
money using simple digital payment channels

● Zero Merchant Discount Rate (MDR)

To encourage the usage of digital payment system the government of India has exempted UPI
based payment system from the Merchant Discount Rate. This will increase the use of digital
payment systems in e-payment gateways.

● Huge unutilized market share with almost 60% not having access to the internet and
90% not even having smartphones.

● Fighting against corruption and black money

The government is fighting against corruption and black money in the economy. The
government is pushing towards a cashless economy to fight corruption to improve the
standard of the society. The black money circulated inside the country also affects the
economic system of the country.

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CHALLENGES

• Transaction and customer data security

The security of our data is a major concern. Transaction security is concerned with giving more
privacy in transactions to every individual buyer and sellers and protecting them from any third
party attack.

• Providing awareness to rural areas

In rural areas there are a lot of illiterate people without any knowledge about the digital system.
Providing awareness about the digital payment system to the total population of our country is
a very difficult task to achieve.

• Tax on UPI services

In future there is a chance of levy of tax or GST for UPI services. This will discourage people
from using UPI platforms. The rules and regulations should be customer friendly.

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Strengths Weaknesses

● Strong government backing ● Absence of infrastructure, laws and

● Regulatory support regulation in case of fraud
● Major facilitator of financial ● Lack of E- literacy
inclusion in the country ● There is transaction limit
● Simplified and multiple payment ● Merchant acceptance and
mechanism unreliable internet connection in
rural areas
● Inertia to adoption due to tax
evasion or other security concerns
● The two factor authentication like
mobile number and PIN
verification may adversely affect
the users

Opportunities Challenges
● Internet penetration
● Prime Minister's Jhan Dhan Yojana ● Transaction and customer data
(PMJDY) security
● Strong banking network and ● Providing awareness to rural areas
cashless economy ● Tax on UPI services
● Zero Merchant Discount Rate
(MDR)
● Huge unutilised market share with
almost 60% not having access to
internet and 90% not having even
smartphones
● Fighting against corruption and
black money

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 CHAPTER 4

OUTCOMES OF THE STUDY

Outcomes of the study

In India digital payments are on the rise. Compared to previous years, digitalpurchases
reached a record high this year. According to a local source, all channels from the Unified
Payment Interface (UPI) to the Aadhar-enabled Payment System (AEPS) have experienced
significant growth. In contrast to the darkness caused by the Covid-19 epidemic and
economic closure, digital payments and fintechmade history in 2020 when a large number of
people chose to stay home and maintainsocial distances.

Concerned about catching new coronavirus infections by visiting bank branches andusing
cash notes, many people are starting to use their smartphones to buy and take out loans with
smooth banking services, not only in the metro but also in small towns.

Due to the closure of COVID-19 and the resulting challenges, a growing number ofpeople
have chosen to trade in digital. Bank transfers have also improved after the collapse in April
as economic growth slowed by almost half. Digital payments reached new heights by 2020,
with all platforms operating efficiently, from the Integrated Payments Program to the Aadhar
Enabled Payment System (AEPS).

According to my analysis, digital transactions based on UPI increased 110% in volume and
109% in value between June 2020 and June 2021 if current trends continue over the next
few years, UPI contribution to the nations entire digital payments industry will increase
significantly. The consistent rate of growth reflected in UPI payments could mean up to 18%
of the countries total target of 30 billion transactions is achieved in the coming years. UPI
witnessed exponential growth in the past year and it also influence the growth of the banking
sector.
• Today India stands second in terms of smartphone users in the world, therefore UPI will
be available for a large number of people. So, the number of transactions is increased as
well as the customers also.
• The number of transactions on the UPI platform increased during this pandemic because
of people to go in for contactless payment in their life.
• According to the data released by the National Payment Corporation of India (NPCI),
UPI recorded 4.56 billion transactions, worth Rs. 8.27 trillion. On a year-on-year basis,
in December, the volume of transactions more than doubled, while the value of
transactions reported 99% growth. The implementation of UPI paved the way for the
growth of the banking industry.
 CHAPTER 5

EXPERIENCES AND CONCLUSION

EXPERIENCES

This project, “A STUDY ON ROLE OF UPI IN INDIAN BANKING SECTOR”, was a great
learning experience for me. The project contributes to a better understanding about the UPI in
the Indian banking sector during this pandemic. A large number of research papers have been
reviewed in order to provide more effective and relevant information for the project. All of this
provided me with a very positive experience. This research also assists me in better
understanding the various benefits of UPI payments. All this data and knowledge gave me a
better experience.

CONCLUSION

UPI payments are a way to send and receive cash payments to the economy, which serve as an
economic stimulus by facilitating cash flow. People can use UPI programs to perform
worldwide activities at any time of the day or night without having to dig deep into their
pockets. Following the epidemic, there was an increase in the use of UPI services by Indians
such as business people and households, but the COVID-19 wave increased the use of UPI
applications.

Trading with UPI applications is much safer than physical exchange, which involves multiple
hand-held notes in a circular motion. QR code makes payment easier by exchanging purchased
goods or services. This, in turn, encourages more customers to pay directly into their bank
accounts or digital wallets when making any type of purchase, removing the pressure of money
shortages in the market. For small business owners, UPI acts as a direct deposit into their bank
accounts instead of standing in long lines at the bank deposit table, saving them time and
expanding the scope of their business.

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The advent of COVID-19 has enhanced the use of the UPI as well as the understanding and
knowledge of the UPI and its services. Instead of exchanging money for their needs, they simply
pay by UPI, and small business owners or shop owners buy their stock with real-time payments,
and only the retailer offers their goods. However, these mobile carriers, retailers, or small shop
owners can now get their required stock by making UPI payments from affiliate retailers.
Although there has been an increase in the use of UPI services following the introduction of
cash marketing, the epidemic has encouraged people to incorporate it into their daily routine.
The current trend indicates the acceptance and implementation of UPI applications willcontinue
to increase as people realize and understand their value. UPI services contribute significantly
to the development of the Indian economy and social levels.

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 BIBLIOGRAPHY

● https://www.npci.org.in/who-we-are/about-us
● https://www.ijrra.net/April2018/ConsComp2018_39.pdf
● https://www.researchgate.net/publication/353217166_Digital_Payment_Service_in_India_-
_A_Case_Study_of_Unified_Payment_Interface/fulltext/60edbeca16f9f313007dffd8/Digital-
Payment-Service-in-India-A-Case-Study-of-Unified-Payment-Interface.pdf
 APPENDIX II
WORK DONE DIARY

Week Dates Work Carried out Signature of

Faculty
Guide
I 4th Oct- 8th Explanation about mini project, Topic discussion
Oct 2021 and seeking inputs from the guide
II 9th Oct- 15th Preparation of Chapter 1, and that is sent to guide
Oct 2021 through mail
th
III 16 Oct- Discussion about the chapter 2 with guide and
25th Oct also informed about the final title confirmed by
2021 University
th
IV 8 Nov- Making the required changes in Chapter 1 and
19th Nov preparation of Chapter 2 and sent that to guide by
2021 mail
V 13th Dec- Discussion about Chapter 3 (SWOC Analysis)
19th Dec with the guide. Preparation of SWOC analysis
2021
VI 20th Dec- Analyzing the interpretation of the study,
30th Dec describing the findings and outcomes of the
2021 study (Chapter 4&5)
VII 20th Jan Discussion with guide regarding doubts relating
2022 to work done diary and other doubts. And
submission of project
VIII 22nd Jan Reworking and corrections done with the
2022 assistance of the guide
IX 24th Jan Plagiarism Check (Certificate of originality)
2022
 Faculty Guide must maintain an attendance for the interactions. 75% attendance is
compulsory.