Patanjali Civil Services Academy

UPI: Towards Code-less Digital Payments [Prelims Bits]

Tags: Governance E-Governance Digital applications

Source: The Hindu

Context: RBI and NPCI launched UPI Tap-and-Pay, enabling RuPay credit-card payments without QR codes or OTPs for transactions up to ₹5,000.

UPI: Unified Payments Interface, developed by National Payments Corporation of India (NPCI); enables instant bank-to-bank digital payments.
Tap-and-Pay: Uses Near Field Communication (NFC)/contactless technology through a Point-of-Sale (PoS) terminal.
Internet requirement: Customer's mobile need not have internet connectivity; the PoS terminal's internet connection facilitates the transaction.
Limit: Up to ₹5,000 without entering a PIN; higher-value transactions require PIN authentication.
Authentication: RBI mandated two-factor authentication (2FA) for UPI transactions from 1 April 2026.
Alternative authentication:
- Passkeys — introduced by Visa and Mastercard.
- CDCVM (Consumer Device Cardholder Verification Method) — Mastercard's biometric authentication using fingerprint/facial recognition.
UPI scale: Accounts for approximately 85% of electronic payment transactions in India.
Key institutions: RBI regulates India's payment system; NPCI operates UPI.
RuPay: India's domestic card payment network operated by NPCI.
NFC: Short-range wireless technology enabling contactless communication/payments between compatible devices or terminals.

Q1.With reference to UPI Tap-and-Pay, consider the following statements:

UPI Tap-and-Pay can facilitate a transaction through Near Field Communication (NFC) between a compatible payment instrument and a Point-of-Sale (PoS) terminal.
In a transaction up to ₹5,000 using the specified Tap-and-Pay facility, the customer's mobile device necessarily requires an active internet connection.
For transactions exceeding the specified ₹5,000 threshold, additional authentication through a Personal Identification Number (PIN) may be required.
RuPay is India's domestic card payment network operated by the National Payments Corporation of India (NPCI).

How many of the statements given above are correct?

(a) Only one
(b) Only two
(c) Only three
(d) All four

Answer: (c) Only three

Explanation:

Statement 1 is Correct: Tap-and-Pay uses NFC/contactless technology through a compatible PoS terminal.
Statement 2 is Incorrect: The customer's mobile need not have internet connectivity; the PoS terminal's internet connection facilitates the transaction.
Statement 3 is Correct: Transactions above ₹5,000 require PIN authentication under the stated arrangement.
Statement 4 is Correct: RuPay is India's domestic card network operated by NPCI.