The National Payments Corporation of India (NPCI) has unveiled plans to add near-field communication (NFC) capabilities to Unified Payments Interface (UPI), Livemint has reported.
NPCI is currently in talks with payment aggregators to expand contactless payments across point-of-sale (POS) devices in India.
This move is aimed at expanding peer-to-peer merchant transactions and UPI’s reach to offline merchants, the report added.
Using NFC technology, UPI will be able to compete with card networks like Visa and Mastercard.
Visa and Mastercard have used the NFC capabilities to expand their tap-and-go payment systems in the country over the past year.
Using NFC-enabled cards, users can pay at POS terminals by tapping their card instead of swiping it.
NPCI is aiming to directly embed this function into smartphones and plans to deploy NFC-enabled UPI service at big stores.
Smartphone users can tap on an NFC-enabled POS device, choose a UPI payment app, and enter a pin on their device, to complete payment.
NPCI also intends to partner with banks to issue prepaid cards and vouchers.
A senior banker said: “NPCI wanted to target the five million POS machines in the country.
“Enabling NFC on UPI was the only way to tap into the POS market and increase the value of payments transacted on the UPI network.
“POS manufacturers and offline payment players are not very happy with this move, as they have strong alliances with card networks, which will now be challenged.
NPCI might also allow banks to add this functionality in payments apps such as Google Pay and PhonePe, Livemint report added.