Why UPI?
The Unified Payments Interface (UPI) has solidified its position as a leading payment service, facilitating a staggering 13.4 billion transactions in March 2024. This is slated to cross 1 billion transactions per day by FY 2026-27, by some estimates (PwC India, 2023). UPI is a prime example of a Digital Public Infrastructure (DPI) that has seen tremendous success, impacting millions of lives.
Today, more than 80% of all UPI transactions are small, and less than Rs.500 each. As UPI expands further into remote Tier V and Tier VI locations, it has progressively brought under its fold, a tidal wave of first-time users who belong to low-income backgrounds, have low literacy or poor digital proficiency or a combination of these.
Why GRM?
At Dvara Research, we chose to think about these users and their pain-points in engaging with UPI. Existing data indicate that
- Transaction declines due to technical reasons ranged from 0.01% to 10% from bank to bank (NPCI, Feb 2023) – a 1000X variation in terms of what users experience.
- Data from Dvara Research’s AI/ML suptech-tool on tracking social media found that between 2020 and 2024 Q1, negative social media posts formed 67% of posts linked to UPI app handles. Of these,
- 33.4% of the time, these posts were about ‘transaction failures’.
- 32.9% of the time, they were about ‘inadequate redress’.
- And 13.2% of the time, the posts were about both transaction failures and inadequate redress.
- 55% of all digital payment frauds were related to UPI and half of these frauds were less than Rs.10,000. (Bureau & Praxis, 2023)
Given the sheer volume of small UPI transactions, and the nature of issues that can arise with just sending and receiving payments across the country, users will require a reliable Grievance Redress Mechanism (GRM). Such a GRM should enable meaningful engagement, enhance the overall experience of the UPI payments applications and positively support the seamless use of digital payments for their livelihoods.
We would naturally expect that users would turn to GRM solutions present inside their UPI app to address various grievances ranging from transaction-related issues and on-boarding issues, to even suspected fraud the NPCI’s Unified Dispute & Issue Resolution (UDIR) system has paved the way for a customer-centric approach to improving speed of resolution for transaction-related issues for payers, providing status updates on pending transactions for payers, and by introducing features such as auto-conversion to chargebacks after prescribed TATs are missed, and so on.
However, our research on user interactions with GRMs within UPI apps has surfaced user-level issues, such as challenges in navigating complex GRMs, inability to flag transaction-related issues, and even challenges in accessing in-app GRMs altogether.
Our research also revealed that many users tend to seek resolution outside of the in-app GRM due to the incomprehensible nature of resolutions available within the application, delays, or a lack of trust in the existing in-app mechanism. This may result in grievances going unresolved altogether and the UPI ecosystem could get blind-sided by potentially major issues that may be building up for users of this essential DPI.
To effectively address user grievances and solidify the in-app GRM as an epicentre for grievance redress, we must prioritise seamless, timely, accessible, effective, and user-friendly redressal processes.
Keeping these in mind, we designed a Framework for in-app GRMs in UPI, that is aligned to offer support to the UPI user base regardless of their digital literacy. This GRM framework offers design guidelines for an effective GRM by safeguarding users’ values and reinforcing and cultivating trust in the GRM.