India’s Unified Payments Interface
The gateway at the center of India’s open and inclusive digital payments ecosystem
Envisioned by India’s central government, the Unified Payments Interface (UPI) is a combination of an information exchange protocol and white label front end. The government-endorsed Bharat Interface for Money enables the seamless transfer of funds across PSPs. The solution pairs the seamless exchange of data via open APIs with a customizable front end to democratize access to and usability of digital payments.
Framing the vision for an open digital payments ecosystem
• Diagnosed key challenges to the uptake of the Immediate Payment Service (IMPS), India’s existing instant settlement system – especially for smaller transactions. These included low network connectivity and the lack of an accessible user-friendly front end.
• Developed the vision for an information exchange that would enable seamless flow of data and payments across banks and PSPs. Supported this development by consulting with iSPIRT – a development community – to frame design principles for the solution. Consulted the Reserve Bank of India for guidance on framing broad policies for data protection and dispute resolution.
Collaboratively developing the solution
• Developed UPI protocol through deep consultations with fintech partners, development sector thought leaders, and the ecosystem of banks and PSPs. • Engaged banks to assuage concerns about interoperability, while seeking their inputs on both solution design and tailoring of the customer experience for each bank. Gained momentum by lobbying and enrolling the State Bank of India, India’s largest FSP, creating a pull for more than 40 providers to join before launch.
Accelerating growth through ecosystem-wide buy-in
• Launched the Bharat Interface for Money (BHIM), a provider-agnostic, UPI-based application for facilitating interbank payments. The government’s endorsement of BHIM as India’s national payments app created a groundswell of demand, incentivizing participation by providers and giving them a basic UPI.
• Expanded eligibility to banks and non-banks, allowing for participation by diverse market players – each empowered to develop and innovate freely
• Updated governance to reflect the views and inputs of an increasingly diverse roster of participating banks, giving voice to both original promoter banks and new participants.
Widening UPI’s sphere of influence
• Evolved UPI to include new payments models (e.g., small ticket loans, cash withdrawals) and to expand into the wider payments ecosystem. For example, NPCI is actively exploring the viability of Online Dispute Resolution (ODR) for identifying failed transactions and informing efforts to protect the user from technical failures.
• Solidified UPI’s reputation as the gold standard for open, interoperable digital payments, resulting in other emerging markets (e.g., Indonesia, Myanmar, Nepal) recognizing the potential to transform their digital economies.
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