Unified Payment Interface: a potential path breaking technology

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Raj Ranjan, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur


Reserve Bank of India Governor Raghuram Rajan launched the Unified Payments Interface (UPI) system on Monday, as its latest offering in boosting digital money transfers.The interface has been developed by National Payments Corporation of India (NPCI), the umbrella organisation for all retail payments in the country. The UPI seeks to make money transfers easy, quick and hassle free.

Ten major banks — SBI, Canara Bank, BOI, ICICI Bank, HDFC Bank, Punjab National Bank, Bank of Baroda, HSBC, and Citi Bank — are integrating the interface with their mobile apps. “29 banks had concurred to provide UPI service to their customers.

The UPI is an improved version of IMPS. Apart from a bank account, all that you need is a smartphone. Once you register for UPI with your bank, a unique ‘virtual address’ will be created. This is mapped with your mobile phone.To initiate the payment, UPI invokes this virtual identity of the beneficiary and transfers money in real-time. It works on single-click 2-factor authentication.

Suppose one is buying grocery from a store. Instead of handing over cash,one tells his virtual identity number. The cashier generates an invoice through UPI, one  approves it using one’s mobile phone and the payment is made!.

UPI can potentially eliminate the need for maintaining a mobile wallet, as this ‘virtual address’ is not limited only to individuals. This is a significant step towards moving into a cashless economy. It could help in integrating different ATM platforms of the banks. There is no standardization for payments via different net banking integrations. Each bank has come up with its own interface which is bulky and is hard to integrate with. UPI can provide seamless integration in this aspect.

This could be a major boost for e-commerce industry. End-to-end security and data protection on UPI is one of the key areas of concern among customers. As per Saket Modi, the 25-year-old cofounder of Lucideus said that UPI is built in line with the global best standards of secure code development. Mr.Modi who is an ethical hacker said it would take 1,000 super computers running in parallel for a couple of billion years to break open the key of the encryption.


Source: http://www.thehindu.com/business/Economy/unified-payments-interface/article8470746.ece


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