A Giant Step

Dataquest - - EDIT -

Ana­tion­wide in­fra­struc­ture for elec­tronic pay­ments called UPI (Uni­fied Pay­ments In­ter­face) has been launched. UPI lever­ages the smart­phone and its grow­ing user base to un­leash the power of elec­tronic pay­ments. It is a se­cure 1-click, two fac­tor au­then­ti­ca­tion sys­tem with an in­no­va­tive API ar­chi­tec­ture that would al­low many other ap­pli­ca­tions to plug-in. It en­ables mo­bile num­ber and Aad­har num­ber based pay­ments. It al­lows mer­chants as well as con­sumers to pull and push funds. UPI uses an email-like vir­tual ad­dress as a pay­ment iden­ti­fier wherein the bank ac­count num­ber or the mo­bile num­ber can be used.

UPI-based trans­ac­tions would be cheaper at 45 paise per trans­ac­tion when com­pared to credit card and debit card based pay­ments with far higher trans­ac­tion fees.

RBI gover­nor Raghu­ram Ra­jan called it a rev­o­lu­tion when he launched UPI. The bank­ing in­dus­try was rue­ful about miss­ing the pay­ments bus hav­ing been over­taken by mo­bile wal­lets and pay­ment banks. UPI is a leapfrog act for banks in this area. It is hoped that all 29 banks in the coun­try will adopt UPI and when that hap­pens it would cre­ate crit­i­cal mass for cash­less pay­ments to take off in the coun­try.

UPI un­leashes a rev­o­lu­tion on three fronts. First, UPI is truly a break­through in the way In­di­ans bank and pay, they can do so with ease and se­cu­rity. Lower trans­ac­tion costs, higher vol­ume, higher ve­loc­ity would re­de­fine money flows. Se­cond, UPI is a great tool for dig­i­tal and fi­nan­cial in­clu­sion and it can ac­cel­er­ate the move to­wards a cash­less so­ci­ety. Third, it un­leashes a flood of in­no­va­tions in the fin­tech area.

In truly dig­i­tal start-up style, NPCI (Na­tional Pay­ments Cor­po­ra­tion of In­dia), the or­ga­ni­za­tion be­hind UPI con­ducted a hackathon pre­ced­ing the launch. The hackathon threw up five win­ners: VSoft Nerds, CPay, Eko, Ul­traCash, and En­ablers. Each of th­ese com­pa­nies ride on the UPI to pro­vide in­no­va­tive ser­vices and in­ter­est­ing use cases. For ex­am­ple, team Ul­traCash in­te­grated their mo­bile pay­ment plat­form with UPI which en­ables mo­bile to mo­bile trans­fer of money without In­ter­net. It makes wal­let-in-a-mo­bile pos­si­ble. Fundu is a mar­ket­place for users with elec­tronic money or cash. It es­sen­tially be­comes an ATM-on-de­mand when it matches the buyer and seller of money.

The po­ten­tial of UPI is huge. Truly, it is one of the foun­da­tion pil­lars of a dig­i­tal so­ci­ety and a real achieve­ment in the move to­wards Dig­i­tal In­dia. Ed Nair Ed­i­tor-at-large www.dqin­dia.com

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