UPI Apt Solution For The Post-Note Ban Struggle

Without pressure, even those who can transact digitally won’t do it. Even I do not do it, because cash is available easily... Even without demonetisation, it may have happened incrementally, but what this does is to have that quantum jump. ---Commentator on economic affairs S Gurumurthy

True. And this is substantiated by the whopping 5,135% jump in the USSD transactions within 50 days of the demonetisation announcement. Government data says the transactions on USSD increased from Rs1 crore to Rs46 crore. 

Though the Unified Payment Interface (UPI) was launched by the National Payment Corporation of India (NPCI) in August 2016, UPI transaction value grew from 90 crore to 700 crore in just two months after demonetisation was announced. This was a six-fold expansion in volumes.

Initially UPI, that offered instant and easy money transfer, was made part of various banks’ mobile apps. Following an amazing response to this, NPCI launched an advanced version of UPI called BHIM – Bharat Interface for Money -- that brought several new features along with ‘Transfer Money’ and ‘Request Money’. The new app gives:

  • Notifications to the sender as well the receiver of the money
  • A simplified virtual payment address and mobile payment address
  • The option to send money through Account Number and IFSC if the receiver is not registered on UPI
  • A QR code and scanner to send or receive money

The new BHIM app got over five million downloads within 15 days of its launch on 30th December, 2016 and more than nineteen million downloads by March, 2017.


Like Gurumurthy says, demonetisation did drive people towards digital payments as it left them with no other option. According to the RBI data, in December 2016, card transactions of just four banks were Rs 52,220 crore, as compared to Rs 44,119 crore for all banks in August, 2016. The note ban triggered a significant activity in the food, retail, and travel industries too.

Says a BHIM user, “Initially, I was reluctant to use the BHIM app. I was sceptical about its functioning as people told me NPCI, which has created the app, is a government body. However, when finally I did download BHIM and registered myself, I found how cool it was. Instant, hassle-free funds transfer. Now I tell anyone and everyone about it.”

According to IL&FS Director Vibhav Kapoor, the adverse impacts of demonetisation are over, and it will be business as usual soon. Mahindra & Mahindra MD Pawan Goenka too believes that the auto industry will recover completely from the disruptive impact of note ban towards the end of 2017

World class economists and businessmen, as big as Bill Gates have expressed trust in India’s big move saying the country will become the top digitised economy in the years to come.
While India’s transition from cash payments to cashless or digital payments gathered force with demonetisation, UPI has without any doubt, aptly and ably supported the exercise with its efficient and seamless payment system.

What’s more is the ease of usage of BHIM or any Bank’s UPI app. As these apps have a minimalistic UI/UX which is tailored to the users banking needs, it is easy to install and set up. Making transactions are secure due to the two factor authentication; and to send or receive money all you need to do is enter the Virtual Payment Address (VPA) of the payee or payer respectively. Isn’t that the definition of “simple yet effective”.