The Reserve Bank of India (RBI) is currently mulling over the idea of adding a new feature to UPI platforms to ease and prompt more secure UPI payments. The “single block, multiple debits” feature will be useful in situations where one must make the payment post seeking a goods and services delivery.
While announcing the bi-monthly policy review, RBI Governor Shaktikanta Das said, “It has…been decided to introduce a single block and multiple debits functionality in UPI, which will significantly enhance the ease of making payments in e-commerce space and towards investments in securities.”
Will adding this new feature help?
The feature still within review, if added, will help customers to place an order for future payment transactions by blocking money in their bank accounts to make fixed payments at various e-commerce sites or paying towards bills or hotel reservations or investing in various securities. Since the funds remain in the bank accounts till the products are delivered, customers do not bear the risk of losing out on their funds.
Aditya Shah, Founder, JST investments said, “The Application Supported by Blocked Amount (ASBA) allows the blocking of funds for application to IPO, which is already available on UPI. Now RBI is using this mechanism further to create single-block multiple debits. This means the money will just get blocked in your bank account. Only when the product is delivered the money will get debited. This will facilitate online transactions for hotels, etc very easily. Also, this means that UPI can be conveniently used for SIP transactions and the purchase of securities. Similarly, money will get debited only when securities are delivered So, we can say that the convenience of transactions is further enhanced and merchants will get more confidence in the system.”
Benefiting UPI service users in the long run
How many times has it happened that the products have not been delivered to you despite having paid for them? Apart, many merchants complain about how their payment is stuck despite the products or services reaching their customers. Many customers then hesitate to press the “Pay” button again for fear of paying towards the same purchase twice. Most of them rue how they fear the second payment being also stuck.
Dev Ashish, Founder, Stable Investor said, “The new functionality of ‘Single block Multiple Debits’ (or SBMD) will further enhance UPI’s capability by introducing a new use case. This functionality enables UPI users to block funds in their accounts, which can then be debited in future at the time of need. So, the fund remains with the customer and continues to earn interest till the time it is paid out to the vendor later. It is similar to the ASBA functionality by which investors invest in IPOs nowadays. In ASBA, the fund is blocked in the account itself and leaves the account (and debited automatically) only when IPO allotment happens.”
“What it allows is that a customer will now be able to earmark a part of the amount for a specific purpose and then give a mandate (or consent) for future transactions. This future transaction can then go through faster without additional authentication. For example, if a customer authorizes a total of ₹5000 at once for an online vendor. And then when he makes say 10 transactions of ₹500 each in future, then the amount will be auto-debited by the platform till the limit of ₹5000 is reached," Ashish added.
The new feature when added will usher in an added feeling of security as the payments authored against products or services would be initiated only when they are delivered. Apart, the merchants can be relieved as they would be paid once they have made the necessary deliveries.
