India launches new digital payment scheme
National Payments Corporation of India (NPCI) Ltd. launched its new Unified Payments Interface (UPI) system on Monday.
A P Hota, Managing Director & CEO of NPCI told Tech2: “Today a few banks have gone live with UPI, out of 29 banks that had concurred to provide UPI service to their customers. We are confident that several banks will join UPI this year and the number will multiply further. Our focus is in line with the Reserve Bank of India’s vision of migrating towards a ‘less-cash’ and more digital society. NPCI has always been at the forefront to innovate and introduce new products and services at par with global standards.”
By implementing this system, India is planning to copy the success of a similar digital payment scheme in Kenya. Introduced in 2007, Safaricom’s M-PESA system allows Kenyans to send and receive money via mobile phones.
Using the UPI payment solution, users in India will be able to initiate a payment request from a smartphone. The system utilizes virtual addresses as payment identifiers for sending and receiving money and works with “one click, two-factor” authentication. The system also provides an option for scheduling push and pull transactions, for various purposes like sharing bills among peers. Further, the system runs on an Immediate Payment Service (IMPS) platform, allowing the service “everywhere and anytime” availability.
UPI aims to be a universal platform because it will also allow users to make payments using their mobile phone as the primary device without the need for downloading an app to send or receive money. The system therefore eliminates the need for e-wallets.
As BiometricUpdate.com previously reported, the market for this technology is huge. The former Aadhaar chairman conceived of this technology in a news report late last year as a launch pad for banking transformation and innovation, within a country where a tremendous number of people do not have traditional banking accounts.