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Payment Horizons

September 13, 2016

UPI Called The Highlight of 2016


Earlier this month, a recent addition to industry research and commentary – Let’s Talk Payments – published a post entitled “The Wonderful By-Effects of Unified Payments Interface (UPI).” Our company, RS Software, was the firm select to provide the UPI so the title caught our eye as did the commentary provided by the author who wrote:

“If 2016 should be remembered for something, it’s the launch of the first Visa/Mastercard/ SWIFT-free payments system – the Unified Payments Interface (UPI) by the National Payments Corporation of India (NPCI)... But UPI is much more than a breakthrough in payments – it’s a whole new model of the financial services industry ecosystem.”


The insights here were very similar to statements made in a news release announcing the plans to build the UPI. At the time the expressed desire was to provide a digital payments platform that would facilitate the innovation and adoption of digital payment methods while allowing these new ways to pay the ability to access the power of the existing payment infrastructure. It was believed this capability would foster a new wave of innovation in the digital payment space that would expand financial inclusion in a digital India.

With more than a billion mobile phones in India, the UPI can enable a seamless payments experience delivering access for every citizen and business entity, thereby empowering the economy on all levels. As a partner involved in several mobile payments projects in the United States, including creation and integration of mobile wallets and tokenization schemes, RS Software was able to bring significant subject matter and project experience to the UPI project.

In addition, the UPI allows consumers to send and receive money electronically without requiring bank account information. The interface uses two factor authentication to prevent misuse and ensure that money goes to the intended recipient. The UPI also makes it possible for smaller-scale banks that do not have the necessary infrastructure to set up their own digital banking products.

Sriram Natarajan pointed out in a post on the Lafferty website on September 7, 2016 the benefits of the UPI that become more obvious in light of these facts:

  • It costs India $135 billion a year to manage cash. (RBI estimates)
  • I12.42 percent of India's GDP is in cash — the highest in the world. (World Bank estimates)
  • IDebit and credit cards account for a measly seven percent of transactions — 78 percent is cash. (BCG -Google Digital Payments in India 2020)
  • IIndia has only 1.2 million POS terminals which accept cards.
  • IAlthough India has more than a billion mobile phones, only 200 million are smartphones.
  • IAround 150 million mobile wallets are in circulation (Paytm being the most prominent with 100 million).

But the UPI model is more than a boon for India. It is an approach that could be a good play for other countries seeking to deploy a system short on fees and long on providing a foundation for adopting the latest and greatest digital capabilities. This is a clear example of how today’s technical tools can be applied to challenge the incumbent global players and entrenched payment infrastructures around the world to ease the constraints that keep many from participating in the electronic (cards, phones, wallets, and more) payments revolution that is bringing more convenience, choice and security into the daily lives of people everywhere.