UPI makes way as payment option on mutual fund investment platforms

The use case of Unified Payments Interface or popularly called UPI is no more limited to peer-to-peer payments and merchant transactions, but expanding into other investment areas such as mutual fund and stock market too.

The new entrant into mutual fund investment Paytm Money is set to add Unified Payments Interface (UPI) as a payment mode. The platform will offer UPI as a payment gateway option that will allow users to invest via their linked bank accounts.

Zerodha, the closest competitor of Paytm money, enabled UPI payment option this February and have witnessed a 46 per cent transaction shift in terms of volume to UPI-enabled payment. The platform claims to have around 18 per cent of transactions in terms of value moved to UPI.

Besides, other asset managers such as IDFC Asset Management and LIC Mutual Fund Asset Management have been offering the option of payment via Unified Payments Interface since last year. Fund houses such as Aditya Birla Sun Life AMC, Reliance Nippon Life AMC, Motilal Oswal AMC, Quantum AMC, and Baroda Pioneer AMC also offer UPI payment option.

Zerodha has integrated with Google Pay so customers get payment notifications on Pay and can transact with their UPI pin. Customers not using Google Pay can get notifications from the Zerodha application itself.

Pundits say that the UPI-enabled payment options will work for a platform like Paytm Money, which has been targeting smaller cities to capture new investors. They explained that sometimes first-time investors hesitate before revealing bank account details on online investment platforms, but UPI address can help them mask their account details and at the same time allow similar payment options like net banking.

Besides, by offering UPI, fund houses can also reduce the time of investing. It takes about 2-3 days to get units in your portfolio after the final transaction. Redemption, too, takes about 2-3 days. However, with UPI payment the said time can be reduced within 24 hours.

The development was first reported by ET.