A Giant Step
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