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by pcx
2137 days ago
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VPA is used for discoverability across UPI clients. Phone numbers can be used for discoverability among users of a single client. For eg: foobar@icici on Google Pay & baz@hdfc on PhonePe can transact with each other, but can't use phone numbers. But +91-1234567890 & +91-9876543210 can discover & transact only if they are both on either PhonePe or Google Pay or any other client application. QR Codes were initially client-specific too, but now they are scannable across apps. UPI truly is a revolution. I can have a 6Rs chai tea (8 cents) from a road side tea stall and pay using UPI with zero transaction fees. |
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The main benefit of UPI is that it works really well for small amounts, e.g. the INR 6 tea. Such small transcations were traditionally too small/uneconomical for Visa/Mastercard.
However as the transaction size grows, say you're buying a laptop for INR 50,000 -- that's when the protections Visa/Mastercard build in against fraud start helping you and UPI's "no transaction fee" value proposition also starts looking like "no accountability".
Interestingly, India has a home-grown Visa/MC alternative called RuPay, which also waives transaction fees for small amounts and is a credible alternative to Visa/MC.
Unfortunately Indian startups have been obsessed with pushing e-wallets (PayTM et al) or direct electronic cash transfers (UPI) because it benefits them -- as the transaction size goes up it certainly doesn't protect the consumer.