Google, the American technology behemoth led by an Indian-American, has recommended US Federal Reserve (central bank of United States, like RBI of India) to replicate United Payments Interface (UPI) model for its “new interbank 24x7x365 RTGS with integrated clearing functionality to support faster payments in the United States”.
UPI is an instant real-time payment system launched by the government of India to facilitate hassle-free digital transactions. The interface is regulated by the Reserve Bank of India and works by instantly transferring funds between two bank accounts on a mobile platform. It is an umbrella organization for all public and private retail payments in the country.
The major private players which operate on UPI are Paytm, PhonePe, Amazon Pay, and Google Pay and the public sector player is BHIM (Bharat Interface for Money) launched by PM Modi on December 30, 2016. The UPI and BHIM apps were developed by National Payments Corporation of India (NCPI) which is promoted by the country’s central bank- the Reserve Bank of India.
Google is already successfully operating Google Pay, an app supported through UPI, in India. The American company worked closely with National Payments Corporation of India (NPCI), which comes under the ambit of RBI, to develop Google Pay. “We’ve been pretty vocal that we believe the right model for driving digital payments is through partnership between banks, governments and tech companies through open and standard-based infrastructures like UPI,” said Caesar Sengupta of Google India.
UPI was rated as best Immediate Payments Interface (IMPS) rated topmost payments service in ‘Faster Payments Innovation Index’ by Fidelity National Information Services (FIS). The government made digital and card transaction fee to promote digitization of financial system in the country, and this led to digital transaction revolution in the country.
According to Mark Isakowitz, vice president, Government Affairs and Public Policy, U.S. and Canada, Google, “First, UPI is an interbank transfer system [there are now over 140 member banks, after initially launching with 9 participating banks]. Second, it is a real-time system. Third, it is ‘open’ — meaning technology companies can build applications that help users directly manage transfers into and out of their accounts held at banks.”
Previously, many experts and committees suggested that UPI and RuPay should be taken on a global scale. The Nandan Nilekani led committee on digital payments had recommended that it was time to take UPI global. In an article published in Livemint, Rahul Matthan, a partner at Trilegal and author of ‘Privacy 3.0: Unlocking Our Data-Driven Future’ argued that UPI is world-class and it’s time to make it international. “UPI may not be decentralized but we know it works well at scale even over patchy mobile networks,” wrote Matthan.
In the pre-Modi era, the international digital transaction players like Visa, Mastercard and American Express were involved in monopolistic practices as they were the sole players. They used to charge customers an outrageous processing fee and had made card payments an elite practice. The Modi government launched country’s own digital payments system and built infrastructure to encourage digital payments.
RuPay card was created for Indian users for encouraging card-based transactions and phase out cash-based economy. Now the card is accepted in 195 countries and foreign companies and users have shown interest in RuPay. Singapore became the first foreign country to get RuPay scheme along with other facilities provided by National payments corporation of India like Unified Payments Interface (UPI) and BHIM mobile payment app. Another country which got the RuPay facility is the island nation of Maldives.
The American companies like Visa and Mastercard which behaved in a ruthless manner when the country did not have a digital payments infrastructure have now accused the government of monopolistic behaviour. Today, American central bank is itself considering replicating a technology, developed in India. This is a big win for technological prowess of the country.