What's the Difference Between Pull and Push Payments in India?

Highlights:

• Understand the difference between push and pull payments and how each payment model affects customer experience, cash flow, and payment collection.
• Explore real-world Indian payment examples, including UPI, QR code payments, UPI AutoPay, e-mandates, card-on-file transactions, and subscription billing.
• Learn when to use push vs pull payments to optimise one-time purchases, recurring revenue, payment success rates, and business efficiency.

Introduction

Money can move in seconds, but the way it moves can make a significant difference to your business. Every time a customer pays through UPI, card, or auto-debit, there is an underlying payment flow determining who initiates the transaction and how the funds are transferred.

For Indian merchants, understanding the difference between pull payments and push payments is more than a technical detail. It can directly impact customer experience, payment success rates, recurring revenue, and overall business efficiency.

Should customers manually approve every payment, or should your business be able to collect payments automatically after receiving consent? The answer depends on whether you are using a push payment or a pull payment.

As digital payment systems in India continue to evolve, with innovations like National Payments Corporation of India UPI AutoPay, e-mandates, and real-time bank transfers, choosing the right payment model has become essential for merchants of every size.

What Is a Push Payment?

A push payment is any monetary transaction initiated by the payer, rather than the payee. Common examples include a customer swiping a credit card at the cash register or choosing to pay by digital wallet at an online checkout.

If you receive $60,000 in an insurance payout, that’s a push payment because the insurance company sent the funds directly to your account. Similarly, if you make a withdrawal from an ATM, this is also a push payment (because you triggered the transaction request).

What Is a Pull Payment?

A pull payment happens when a payee triggers a transaction, instead of the payer. That means the organisation expecting payment sends a request, and automatically collects the amount specified. These are also known asmerchant-initiated transactions.

The clearest example is an ACH payment that covers your phone bill. Rather than logging into your bank account every month and sending $60 to T-Mobile, you agree to ongoing payments that don’t need any action on your part.

Push Payment Examples for Indian Merchants

Push payments are transactions where the payer (customer) actively initiates the transfer of funds to the payee (merchant). In India, these are highly popular due to the rise of instant, real-time digital infrastructure.

Here are key examples of push payments for Indian merchants:

1. UPI-Based Payments (Most Common)

Unified Payments Interface (UPI) is the dominant push payment method, where the customer scans and authorises the payment using a PIN.

• Static QR Code Scanning: Customers scan a printed QR code at a store (e.g., Paytm, BharatQR) using apps like Google Pay, PhonePe, or BHIM, and enter their PIN to complete the transfer.
• Dynamic QR Code: A unique QR code generated for a specific transaction amount at a Point of Sale (PoS) terminal, which the customer scans and approves.
• UPI Intent Flow: On mobile websites or apps, a customer clicks "Pay" and is automatically redirected to a UPI app to initiate the push transaction.

2. Bank-to-Bank Transfers

• IMPS (Immediate Payment Service): Customers can initiate immediate, 24x7 electronic funds transfers from their bank app to the merchant’s account.
• NEFT/RTGS: Used for larger, B2B transactions, where the customer instructs their bank to move funds to the merchant.

3. Digital Wallets

Customers use pre-loaded wallets to "push" funds to a merchant's wallet account.

• Examples: Paytm Wallet, Mobikwik, or PhonePe Wallet.

4. Direct Bank/Wallet Transfers

Customers send money directly to a merchant's mobile number or UPI ID (VPA) through a peer-to-peer (P2P) approach, often used by small retailers for contactless payments.

5. USSD Payments (*99#)

For feature phone users, customers can dial *99# to initiate a banking transfer to a merchant without an internet connection.

6. Merchant Initiated Payouts (Refunds)

While primarily for B2C, a merchant can push a refund directly back to a customer's account instantly via API integrations.

Pull Payment Examples for Indian Merchants

Pull payments (also known as merchant-initiated transactions) occur when a merchant or payee, with prior authorisation, "pulls" funds directly from a customer's account, rather than the customer "pushing" the money to the merchant each time.

In India, this is largely driven by UPI mandates and card-on-file services.

Here are key examples of pull payments for Indian merchants:

1. UPI Recurring Mandates (UPI AutoPay)

This is the most common example of modern pull payments in India, launched by NPCI for recurring transactions.

• Examples: Automatic monthly deductions for subscription services.
• Use Case:
  Recurring payments for apps like Paytm, PhonePe, or Google Pay.
• Usage: Customers set up a one-time approval, and the merchant (e.g., a utility service) triggers the payment automatically on a set date.

2. Credit/Debit Card-on-File Transactions

When a customer stores their card details on an e-commerce platform and consents to automatic billing, the merchant can initiate a pull payment.

• Examples: Monthly automated payments for gym memberships, Saas subscriptions, or SaaS platforms.
• Usage: "One-click checkout" on platforms like Amazon or Swiggy, where the merchant initiates the charge on the card network after the initial authorisation.

3. E-Mandates for Financial Services

Financial institutions and fintech apps in India use this extensively to pull payments directly from bank accounts (similar to NACH/ACH in other regions).

• Examples: Automatic EMI payments for loans or Buy Now, Pay Later (BNPL) services.
• Usage: Automated SIP (Systematic Investment Plan) contributions in mutual funds or SIPs via platforms.

4. Utility Bill Autopay

Similar to card-on-file, but directly linked to the customer's bank account or digital wallet to pay recurring bills.

• Examples: Automatic payment of electricity bills, water bills, or internet charges.
• Usage: Set up via platforms like Paytm Payments Bank or other bank apps to pull funds to pay monthly service providers.

5. Closed/Semi-Closed Wallet Auto-Reload

Digital wallets in India can be configured to "pull" money from a linked bank account when the balance falls below a certain threshold.

• Examples: Automating the reload of an Amazon Pay balance or Paytm wallet when it runs low.

Push vs Pull Payments: Key Differences

When it comes to how your business gets paid, the key difference between push and pull payments lies in who initiates the transaction. This might seem like a small difference in payment method, but it can affect everything from your cash flow and customer experience to how you handle fraud risk and processing fees.

Understanding the pros and cons of each method can help you build a more efficient payment strategy and help you choose the right payment service provider. To help you decide what’s best for your business, we’ll break down the key differences between the two payment methods and explore when to use each one.

But first, here’s a quick overview of how push and pull payments stack up:

The Bottom Line for Merchants

Push and pull payments serve different business needs. Push payments give customers control and work well for one-time transactions. Pull payments automate recurring collections after authorisation, improving cash flow predictability for subscription businesses. Most merchants benefit from offering both push for checkout flexibility, pull for recurring billing automation. Choose based on your business model, transaction frequency, and customer payment preferences.