Question

UPSC Prelims 2017 Question:

Which of the following is a most likely consequence of implementing the ‘Unified Payments Interface (UPI)’

1. Mobile wallets will not be necessary for online payments.
2. Digital currency will totally replace the physical currency in about two decades.
3. FDI inflows will drastically increase.
4. Direct transfer of subsidies to poor people will become very effective.

Answer (Detailed Solution Below)

Option 1: Mobile wallets will not be necessary for online payments.

Detailed Solution

Explanation:

Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood.
It also caters to the Peer to Peer collect request which can be scheduled and paid as per requirement and convenience.
The major consequence of its implementation is that mobile wallets will not be necessary for online payments. A single mobile application will be required for accessing different bank accounts.

Therefore, option (1) is the correct answer.

Knowledge Box

How is UPI unique?

Immediate money transfer through mobile device round the clock 24*7 and 365 days.
Single Click 2 Factor Authentication – Aligned with the Regulatory guidelines, yet provides for a very strong feature of seamless single click payment.
Virtual address of the customer for Pull & Push provides for incremental security with the customer not required to enter the details such as Card no, Account number; IFSC etc. QR Code.
Best answer to Cash on Delivery hassle, running to an ATM or rendering exact amount.
Merchant Payment with Single Application or In-App Payments.
Utility Bill Payments, Over the Counter Payments, QR Code (Scan and Pay) based payments.
Donations, Collections, Disbursements Scalable.
Raising Complaints from Mobile App directly.

Subject: Economics | Money and Banking

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