Intro

UPI is India's Domestic(for now) cross bank Payment solution. When registering on the platform, You can create some UPI IDs(or Virtual Private Addresses, VPA. I'll be calling this VPA from here on) which look like @. Then, Anyone else on the platform can send you money using your VPA and nothing else. The payments are instant and there is no transaction fee for now.

What changed?

When UPI was introduced, Most UPI Applications showed you the VPA somewhere in the UI and they did not make deliberate attempts to hide the VPA. From the user experience's side, This was maybe not great because VPA was a new concept for a lot of people but the benefit of it was that once you have the VPA you can send money to it from any UPI Application.

Now, The situation has changed a lot.

Google Pay has changed this by,

1. Hiding the UPI ID from the Main/Home page.
2. It is not possible to see a payee/payer's VPA if they were also using Google Pay. In this case, Google will only show you their phone number. The only way to see VPA of this is by clicking on a transaction to see it's details.

I do not know if PayTM was always like this but they generate really obtuse looking VPAs that most people won't be able to remember anyway. (10-20 random characters for the section of a VPA)

What this has led to?

This has had some interesting effects. A good number of completely non-technical people I interacted with equate phone numbers as the VPA but unlike an actual VPA, Phone numbers are not interoperable across different applications. So, As an example, A user who has registered a VPA on Google pay using their phone number can not send money to a user on PhonePe/PayTM using their Phone number.

This creates bit of a walled garden because those users who don't really understand VPA will ask you to pay using their phone number but you can't pay to their phone number if they are not using the same application as you!

This actually happened multiple times with me where I just couldn't pay to someone because I don't use the same application as them and they had absolutely no clue about VPA.

So an application which has the most number of users may continue to be a leader in this segment because their users only know about phone numbers and insist to people to pay using their phone number and it's annoying for me because I trust some app more than others and do not want to install the UPI Application they are using just to be able to pay them.

Solutions to this problem

This has been in the back of my head for a while now and I was hoping that someone will bring attention to this problem to NPCI(The organization that made UPI) as it would've been a real shame to let these companies poison what is supposed to be an amazing cross bank payment solution and it turns out they did roll out new rules for this back in July 2021.

The link to these new rules is here

Under these new rules, They are introducing a new identity similar to a VPA and they are calling it, UPI Number.

1. This will be a number chosen by the user between 8-11 digits in length.
2. The phone numbers in India are 10 digits in length so if you pick a 10 digit number, It has to be your phone number.
3. An user can have multiple UPI Numbers
4. They'll have to select which UPI ID an UPI number should map to at the time of it's creation.

There are also some points to take in account stuff like Recycled numbers. These UPI numbers shall remain active 6 months from the last active transaction for a recycled number which seems okay to me.

Overall, It looks like NPCI caught this issue at just the right time and rolled out new reasonable rules to tackle this problem.