Building trust in digital payments
The other side of UPI payments!
Any sufficiently advanced technology is indistinguishable from magic. But what happens when the magic occasionally fails?
During a 2019 field visit, I encountered a business owner who kept a UPI QR code hidden in his cash box. When asked why it wasn't prominently displayed in his shop, he explained that he only uses UPI payments as a last resort due to previous issues with failed transactions.
He shared an experience where a customer's UPI payment didn't reach his bank account. Upon investigating with his bank, he was told that the transaction was made through a third-party app and the bank wouldn't be able to assist him. Unable to retrieve the money, he had to absorb the loss. This incident made him distrust not just that specific UPI app but digital payments as a whole. He firmly believed that all UPI apps were fraudulent, a belief reinforced by a Kannada WhatsApp message warning against using apps like PhonePe or Google Pay. He considered this message credible because it was forwarded by a friend who is a lawyer, and he felt that this friend's messages were more trustworthy than others.
It might be simple to disregard this individual's viewpoint as a believer in Whatsapp University and his financial setback as an isolated event. However, if we reconsider, UPI payments are magic when they function perfectly, but they can be a disaster when they don't. The vast number of entities involved in a single transaction, from the sender's bank to the third-party app, to the payment service provider, to NPCI, to the beneficiary's bank, is overwhelming. It's probably best if you examine the image below.
The graphic above illustrates the numerous parties participating in each transaction. Who should be held accountable when a payment fails? The concept of trust is complex and elusive. In the context of UPI payments, trust is gradually established through a series of successful transactions over time. However, a single failure can completely undermine this trust.
Transferring money via bank vs apps
The traditional method of transferring money through bank branches has been around for a long time. How does this differ from digital payments? The key difference often lies not in the amount transferred but in who assumes responsibility for the transaction. In a physical branch, I complete a challan and hand it over to the bank teller, who verifies it and provides a receipt. From then on, the bank assumes responsibility for transferring my money from one account to another. However, with UPI, the responsibility entirely falls on the individual. If a transaction fails in the former method, the bank would be held accountable, whereas in the latter, the individual will bear the blame.
The complexity of UPI's operation is one factor, makes it difficult for individuals to identify where the process fails. Additionally, the lack of a uniform, user-friendly, and accessible complaint resolution mechanism across all applications is another issue. While some apps provide complaint resolution mechanisms in local languages, others do not. Almost all third-party apps require users to join an asynchronous queue for their inquiries to be addressed, which is an unfamiliar method for new to internet users. The most similar experience they might have had with a queue would likely be when contacting customer service for their telecom inquiries.
Payment failure for emergent users
Consider a scenario where a transaction fails for an individual who does not have sufficient funds in their bank account. For instance, a daily wage worker attempting to buy groceries. If they experience a payment failure, they not only lose the money but also the opportunity to purchase necessary supplies for their household. Even if the deducted money is eventually refunded, their immediate need for groceries remains unfulfilled.
A colleague who previously worked as a designer for a payment app once shared that it's vital for every UPI app to ensure the success of their initial few transactions. This is because these initial experiences can significantly influence whether users continue to use UPI apps or not.
The social implication of a payment failure
Transaction failures can have societal repercussions in certain scenarios. This was evident in a study where we conversed with a bus driver in Mumbai who expressed disinterest in using UPI apps. When queried about his reasons, he responded with a rational query. What would happen if he attempted to scan the QR code at a tea shop and the transaction failed? He would be ridiculed by the shop owner for not having enough money to purchase tea and accused of creating a scene under the guise of transaction failure. This viewpoint significantly altered my perspective. There have been numerous instances where I've managed to leave a tea shop, claiming network failure and vowing to pay later if the transaction doesn't go through. It was only later that I recognized this as a privilege.
"While we all applaud the triumph of UPI, there remain areas of scepticism and distrust due to technological and network glitches, particularly among new users. Any technology that leaves a user feeling inadequate must progress, even if it is for one person.