Transactions are recorded on distributed ledgers, making them more resistant to censorship or direct state intervention. You can use it to send money directly from your bank account to your friend’s account, without needing cash or waiting. UPI – Unified Payments Interface Have you ever wanted to send money to a friend immediately, even if they’re in a different bank? It’s like magic for your mobile, allowing you to transfer money from one bank account to another right away.
It has commenced the pilot in the wholesale segment from November 2022. For most people, the major disadvantage of UPI is that it requires a stable internet connection to function, which can be a barrier in areas with poor connectivity or unreliable network coverage. Regardless of which payment system you choose, it’s essential to be aware of its features and limitations to make an informed decision.
Users link their bank accounts to a UPI ID, making transactions convenient and secure. UPI has revolutionized digital payments, enabling various services like bill payments, online shopping, and peer-to-peer transfers. However, while the UPI transactions are completely backed by physical currency, the digital rupee or CBDC is a legal tender in itself and need not necessarily be backed by physical currency. “Although both digital currency and crypto currency involve online modes of transaction, there are slight differences between the both. CBDC refers to the digital form of a country’s fiat economy, while crypto currencies are an alternative form of payment with a unique algorithm.
It is also more than an interface or fund transfer mode but is expected to improve digital payments further. A CBDC is a digital currency issued by a country’s official central bank. A Canadian CBDC would be a digital version of Canadian paper notes and coins. The financial landscape around the world is changing quickly due to the reinvention of money and innovations in payments. While token-based CBDC functions like digital cash that may be kept offline in a digital wallet, account-based CBDC functions like a digital bank account.
UPI is primarily designed for domestic transactions within India and does not directly support cross-border payments. However, initiatives like the NPCI’s UPI 2.0 have introduced features that enable linking UPI to other payment systems for cross-border transactions. CBDC has the potential to simplify and streamline cross-border transactions by providing a digital currency that can be used internationally. Conversely, UPI’s popularity and adoption are rapidly growing every day. Since its launch in 2016, UPI has captured the Indian financial world largely, and its dominance in the digital payment system stands at 52%.
