Payments
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Mobile Banking
UPI One Time Mandate (OTM)
2 mins Read | 1 Month Ago
What is UPI One Time Mandate (OTM)?
UPI One Time Mandate is a functionality that allows a customer to authorize a one-time blocking of funds in their account for a future payment. The funds remain blocked until the goods or services are provided to the customer, after which they are debited and transferred to the merchant. It is especially beneficial for services that require periodic payments such as insurance premium, IPOs, Travel, Hospitality or Subscription etc, where payment is needed at a future time. ICICI Bank has been the leader in launching this product in the market along with NPCI, as well as the first one to innovate end-to-end real-time settlement solutions for merchants.
How does UPI OTM Work?
- The customer authorizes the blocking of a specific amount in their account using UPI. (Amount is not debited immediately but lien marked in customer’s account)
- The blocked funds act as a security assuring the merchant that payment will be made after the agreed condition is fulfilled.
- Once the goods/services are delivered, the blocked amount is debited via UPI from the customer’s account and credited to the merchant.
- If the transaction is not completed or is cancelled, the blocked amount is released back to the customer’s available balance.
Benefits of UPI One-Time Mandates –
- Security for Customers: Funds are debited only after the delivery of goods/services, ensuring the payment happens only when the goods/services has been received.
- Security for Merchants: Guaranteed fund collection via the one-time blocking funds functionality, reducing the payment risks.
- Building Trust & Transparency: Customer can block funds as a promise to pay, increasing the merchant’s confidence and improved transparency for customers
- Real Time Settlement: Ensures timely payment transfer to merchants once the conditions are met.
- Success Rate: Since OTM works on APIs based mechanism thereby improving success rate of the transactions as the required funds are blocked in the customer’s account at the time of placing the order, ensuring availability of funds at the time of payment
- Interest earning: Customers would continue to earn interest on amount blocked for OTM mandates, since the amount is just being blocked for future purposes and not debited at that time of setting up the mandate.
- Steps to Approve UPI Mandate via iMobile application:
User will login to iMobile application where his/her vpa is registered.
Path: UPI Tile → UPI Mandates → List of mandates will appear on screen → Select the respective mandate → Approve it by entering UPI PIN