Real Time Payment: How does this New-age technology work? 

We don’t have to visit the bank to make transactions, or stand in a queue to make bill payments nowadays, thanks to UPI. Now you can buy anything using a UPI code! Everything is completed in just a few clicks by simply entering the UPI ID or scanning a QR code! Well, part of this is thanks to COVID-19. 

During and after the COVID-19 pandemic, long lockdowns and social distancing, there was a manic rise in digital transactions across the world as well as India. In 2020 alone, there were approximately 70 billion digital transactions! India has the greatest number of real-time payments (RTPs) of any of the world's 54 countries that use RTPs! With over 25.5 billion real-time payment transactions completed in 2020, our country surpassed everyone in using digital payment systems! 

Real-time payment methods are digital platforms through which you can make such payments online safely and securely. UPI or Unified Payment Interface is one such platform which can be used through apps like Google Pay, Paytm, BharatPe, and many more. Let's understand how exactly this system works and look at some countries with the most real-time payments. 

How does the real-time payment (RTPs) system work? 
It is a very simple procedure. Assume you're purchasing a book and making a payment. You first scan a QR code or enter the shopkeeper's UPI ID into any one of the hundreds of RTP apps like your bank’s app, PayTm or others. Following this, enter the amount you wish to pay and a password and your payment is initiated from your bank account linked to the app. Your bank approves the transaction digitally and sends a message to the RTP platform. The app reads the message and releases the funds. The receiver is notified that the money is deposited in their account, and you can walk away with your favourite book! Isn't it easy-peasy?  

The rise of UPI in India 
In India, digital payments in 2021 had a staggering $300 billion value. What is the secret recipe behind such an outstanding result? The answer is three words: Unified Payments Interface or UPI. Going fully digital allows governments to track money better and saves everyone a lot of time. As a result, every country has jumped on the bandwagon to develop their payment app. Leading the pack are three nations: India, China and South Korea.  

The National Payments Corporation of India had designed this platform of UPI in 2016. However, the real usage was seen after COVID-19 waves started. Its numerous advantages and simple interface have made it easy for the average person to make payments with mental peace that his account is safe from cybercrime.  

With the help of an RTP app like Google Pay or Airtel money, UPI allows instant fund transfer between two bank accounts. These apps use UPI-based interfaces. What makes using UPI convenient is the advantages it provides while making an online transaction. For example, transferring funds via NEFT incurs a charge of Rs 2.5 per transaction, whereas UPI has zero charges! Additionally, it takes less than a minute to add the UPI code and transfer even large amounts going up to lacs of rupees. Isn't it amazing? Let us not forget that UPI allows us to transfer small amounts to local vendors like grocery, and other utilities in a matter of seconds, reducing time spent at ATMs and banks to withdraw cash.  Further, a single RTP app can access multiple bank accounts via different UPI Ids, should you choose to do that. Lastly, the transfer is push only, that means you cannot debit someone else’s account. You can only give money or ask for a payment. This makes UPI very safe!  

Statisticians predict that the value of our digital payments will reach $1 trillion by 2026, owing entirely to the introduction of UPI! 

RTPs in China and South Korea 
China, like India, has a plethora of RTP apps. The most popular online payment apps are Alipay and WeChat Pay. China’s version of UPI is the Internet banking payment system (IBPS), launched in 2010. Since then, some Chinese businesses have been able to digitise their finances completely. In China, approximately 900 million people used digital payment transactions as of December 2021. The total transaction value is expected to reach $3,225 billion in 2022. 

South Korea is yet another country that has followed in the footsteps of India and China. It has significantly digitised all types of banking and peer-to-peer transactions. Amex, Kakao Pay, Cashbee, and Toss Pay, are popular apps in South Korea. South Korea came up with the Electronic Banking System Interface in 2019. If projections are correct, South Korea's transaction value could reach 214 billion dollars in 2022. Digital payments are expected to reach 500 billion by 2024! The power of digital money is truly incredible!