Aniket Pujari
This solution offers merchants control over the transaction process while avoiding third-party app reliance, thereby improving customer experience, data security, and overall customer retention. Here, we explore BharatPe’s Merchant Plugin, which combines UPI Plug-in and TPAP (Third-Party Application Provider) capabilities to give merchants a flexible, scalable approach to managing digital payments.
Understanding UPI and Its Impact on Merchants
UPI has transformed digital payments in India, enabling secure, instant transactions by linking users’ bank accounts to a unique UPI ID. This system has simplified how merchants collect payments, promoting business growth through quick, easy digital transactions by customers. However, traditional UPI processes often involve multiple app transitions when merchants lack in-app payment solutions, which can lead to increased transaction dropouts, lower success rates, and potential exposure to competitors’ platforms. For merchants, a seamless in-app payment experience is essential to reduce transaction failure and retain customer focus.
Significance of In-App Payment Experiences for Merchants
For any application facilitating purchases or services, payment integration is a key component. Without it, customers are often redirected to few TPAPs to complete transactions, resulting in friction, delays, and potentially lost sales. . This process often falls short in competitive industries where every interaction matters. Hence, many merchants now seek in-app payment options to avoid disruptions and potential competitor exposure, striving to offer a smooth, reliable transaction experience that keeps users within their own ecosystem.
Options for In-App Payment Integration for Merchants
Merchants who want to deliver in-app payment functionality while controlling the transaction flow can choose between two primary options: the API-Based Integration (Multi-Bank Model) or the Bank SDK Approach (Single Bank Model).
API-Based Integration Model (Multi-Bank Model)
In the API-based model, a merchant needs to partner with NPCI and a sponsor bank, collaborating with multiple banks to provide UPI services. The merchant uses API services from partner banks, with interactions taking place between their servers and the bank’s PSP servers. Key features include:
● Volume Requirements: This model is relevant for the larger merchants that can reach a threshold of 5% of total monthly transaction volume/value on UPI.
● Bank Partnerships: Merchants must partner with at least three banks, and up to a maximum of ten banks.
● Customer Handle Distribution: Banks provide default handles for customers within their network, ensuring equal handle distribution for customers outside participating banks.
API integration offers scalability and broader customer reach, though it requires complex setup, multiple bank partnerships, and higher level of compliance.
Bank SDK Approach (Single Bank Model)
The Bank SDK model simplifies UPI integration by providing merchants with a single bank’s SDK to manage in-app UPI functionality. Ideal for smaller merchants, this approach allows transactions to be initiated on the merchant app, processed through the bank’s SDK, and finalized by the bank’s PSP server. Features include:
● Ease of Integration: SDK simplifies the UPI process, making it a favorable option for merchants not requiring multi-bank support.
● Single-Bank Partnership: This approach works for smaller merchants that may not meet API integration volume commitments.
● Transaction Security: All transaction data remains between the merchant’s app SDK and the PSP bank server, offering strong data protection.
Comparison of API and SDK Integrations
API-based integration is more extensive, requiring multiple bank partnerships and greater volume commitments, while SDK integration suits smaller-scale merchants with simpler needs. Both approaches focus on providing a secure in-app UPI experience, though the SDK option offers faster setup with fewer regulatory complexities.
Regulations and Compliance Requirements
Merchants opting for in-app UPI payments must meet specific compliance standards set by NPCI, including:
● Data Localisation: All transaction data must be stored in India.
● UPI Feature Enablement: Merchants must support features like UPI Lite, AutoPay,IPO etc.
● Account Security: PSP banks secure customer data by sharing hashed account numbers, adhering to NPCI’s privacy and encryption standards.
UPI Plug-In Services
NPCI developed UPI Plug-in services to provide merchants with a streamlined, flexible payment integration option. By leveraging the bank’s PSP SDK, UPI Plug-in allows merchants to offer specific UPI functions relevant to their business, without needing full TPAP registration or direct NPCI agreements. This plug-in operates through the sponsor bank’s app, offering integration ease without too many regulatory obligations.
UPI Plug-in services offer merchants advantages such as:
● Feature Flexibility: Merchants can select the most relevant UPI features for their app without full TPAP obligations.
● Reduced Compliance Burden: Unlike TPAP requirements, the UPI Plug-in model bypasses the need for multiple agreements.
● Direct Communication Channel: Transaction data moves between the PSP SDK and the PSP server unlike API based TPAP model, enhancing data privacy.
By keeping users within the merchant app during payment, UPI Plug-in services provide a more cohesive user experience with increased transaction success rates.
Merchant Plugin in BharatPe: The Power of Partnership
In collaboration with Unity Bank, BharatPe has developed a Merchant Plugin using UPI Plug-in and TPAP guidelines. This plugin empowers merchants to manage transactions directly within their app, maintaining customer engagement and safeguarding transaction data. BharatPe offers flexibility in integration: merchants can initially adopt the UPI Plug-in model and later transition to full TPAP functionality if their business needs t evolve.
Through BharatPe’s Merchant Plugin, merchants can avoid transferring customers to third-party apps, which may expose their data to competitors. Instead, they retain control of the transaction flow, enhancing the customer experience and strengthening customer loyalty. BharatPe configures the plugin based on each merchant’s goals, providing options for TPAP or UPI Plug-in arrangements that align with growth and operational priorities.
Features of the BharatPe Merchant Plugin
The BharatPe Merchant Plugin stands out for its user-focused design and technical efficiency, providing:
● In-App Payment Processing: Customers complete transactions without leaving the merchant’s app, optimizing the user experience.
● Enhanced Security: Built-in NPCI Common Library (NPCI CL) supports MPIN and OTP capture, with encryption protocols to protect sensitive data.
● Transaction Monitoring: Merchants have access to transaction status and reference data, making dispute resolution more efficient.
● Bank Handles: Merchants using the TPAP model can offer exclusive customer handles, while UPI Plug-in uses non-exclusive handles for easy discovery of existing handles, facilitating faster transactions.
BharatPe’s plugin is designed to align with the latest UPI standards and regulatory requirements, offering merchants a comprehensive solution for digital transactions.
The Implementation Journey of BharatPe Merchant Plugin
The time required to integrate BharatPe’s Merchant Plugin varies according to the model chosen:
● Bank SDK Approach: Achievable within 3 months Unlike API based model which may take 6 to 1 year or beyond.
● UPI Plug-in: With adequate bank support and technical resources, UPI Plug-in integration can be completed in as little as one month.
BharatPe provides end-to-end guidance for merchants, covering technical integration, regulatory compliance, and continuous development support. Their hands-on approach ensures that merchants can implement payment features smoothly and efficiently, ultimately benefiting from timely deployment.
Conclusion
BharatPe’s Merchant Plugin is a breakthrough solution for merchants seeking to manage UPI payments directly within their apps. Offering a flexible integration that combines UPI Plug-in and TPAP models, BharatPe’s plugin empowers merchants to provide a seamless payment experience, retaining control over transactions and customer engagement. Whether starting with the UPI Plug-in or expanding to TPAP functionality, BharatPe’s Merchant Plugin is a powerful tool that allows merchants to adapt to their customers’ needs, reduce dependency on third-party apps, and remain competitive in a fast-evolving digital landscape.
The author of this article is Sandeep Indurkar, CEO- Resilient Payments Private Limited, A BharatPe Group company.
NOTE: This is partnered post.
