NPCI rolls out 'Autopay' feature on UPI for recurring payments

In what could be a very significant move in shaping up India’s digital finance ecosystem in the upcoming years, Aadhaar’s chief architect Nandan Nilekani on Wednesday announced that the National Payments Corp of India (NPCI) has gone live with its ‘Autopay’ feature on the Unified Payments Interface (UPI) platform.
The new functionality on UPI will help large scale subscription platforms such as Netflix, Amazon Prime and Disney+ Hotstar and online billers to reduce their monthly collection costs.

It allows bank customers to make recurring transactions below Rs 2,000 through their UPI apps. Most of these transactions currently happen through card-based payments where the NACH-based e-mandate facility is more sophisticated, and the settlements more expensive.


The feature is also expected to be a game changer for small businesses collecting monthly fees, as it allows them to get in a customisable debit agreement with their customers through a one-time consent.

“We believe this facility will not only benefit customers, but also merchants with an all-new recurring payments experience," said NPCI CEO Dilip Asbe. "We also hope to achieve new milestones by expanding UPI's presence especially in the P2M payment space.”

While lenders such as Axis Bank, HDFC Bank and ICICI Bank have already enabled the feature for their customers in a provisional manner since earlier this year, following the launch, others such as State Bank of India, Yes Bank and Jio Payments Bank are also expected to make the functionality available.

Leading aggregators such as Policybazaar, Paytm, Razorpay are also set to make the feature live on their platforms, NPCI announced on Wednesday at an industry event.

The announcement comes at a time when digital payments are gaining increased traction among customers especially in making small ticket purchases and bill payments during the pandemic.

UPI users can create an e-mandate through UPI ID, QR scan or intent. For payments above Rs 2,000 customers would require initiating the transactions through a PIN.

Separately, Nilekani, speaking at the industry event, also revealed that government-backed think tank iSpirt is in talks with top Indian lenders to create a channel for simplifying digital loans to small businesses much like what UPI did for small-ticket payments.


The plan to create an Open Credit Enhancement Network (OCEN) for digital lending is expected to reduce banks’ loan origination costs, said Nilekani.

“Currently the cost of lending is very high in this country,” said Nilekani. “We want to create full-stack digital capabilities from origination to underwriting to happen through a similar protocol…much like UPI is to debit and credit protocol between banks. OCEN will help millions of small business access microcredit.”

Top lenders such as State Bank of India, HDFC Bank, ICICI Bank, IDFC First Bank, Axis Bank and Bajaj Finserv are already on the platform, as per people in the know.

OCEN would attempt to create a common language to standardise the information flow between various participants in the digital lending ecosystem, Nilekani said.

“Digitising end to end credit cycle by bringing UPI, Aadhar and account aggregator framework within the same infrastructure could significantly reduce cost of loans,” he added.