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About UPI: The standardisation of payment interface is done by a corporation called NPCI. It’s an initiative from India's central bank (RBI) and it is non-profi

About UPI: The standardisation of payment interface is done by a corporation called NPCI. It’s an initiative from India's central bank (RBI) and it is non-profit. [1] This means that a private player's implementation does not become defacto standard. Multiple factors are aligning to make UPI successful: 1. Massive Mobile (smart phones) & Internet penetration 2. Cheap mobile data from telcos 3. Low cost of payment infrastructure to the banks and shops. 4. Fast clearing of payments (< 5-8 seconds) 5. Neutral standardisation body with blessings from the central bank [1] https://www.npci.org.in/who-we-are/about-us https://www.npci.org.in/who-we-are/about-us

xyst 5y ago
I could do without #5 to be honest. Should be working towards a more decentralized approach.
- yashg 5y ago
  Why this obsession with doing away with a central authority? What is so evil about a central bank? Decentralization is not cheap. I buy a pack of bread from a door-to-door bread and eggs salesman (Yes that's a thing in India). It costs INR 40 ($0.53). I pay him via UPI, he gets money instantly in his bank account with zero fees. He gets full INR 40 like I had paid him in cash. I don't think any decentralized system will be able to do that with zero fees. It obviously costs money to banks to maintain the infra that makes UPI possible. It still costs nothing for end users to use UPI. You know why is that? Because the Reserve Bank of India has mandated that. A central authority that grants banking licenses and oversees all banks in the country. Banks have to factor in the cost of supporting UPI as a regular cost of business. Banks actually may be saving money by supporting UPI because they don't have to deal with cash. They need less branches and ATMs, less people to handle all the cash. You remove the central authority, and it becomes anarchy.
  - captn3m0 5y ago
    The GP's point isn't about RBI being a central authority, but about NPCI being granted a quasi-monopoly on retail payments despite being a non-government body. One of the important recommendations from the Watal Committee report[x] was to restructure the NPCI-relationship: 1. Change ownership structure. It was 75% owned by 10 banks in India, with no seats for other players in the industry. 2. Allow competition to NPCI. This got envisioned in the recent push for a NUE[0], but with a lot of caveats. RBI ended up deferring the plan[1] 3. NPCI also is pushing heavily to move from a non-profit to a for-profit model: https://www.livemint.com/news/india/npci-turning-for-profit-could-help-key-stakeholders-11609083399751.html https://www.livemint.com/news/india/npci-turning-for-profit-.... This will significantly change the current incentives it holds. As an example of this conflict, RBI runs NEFT and RTGS for free as near-realtime transaction platforms for free, and now 24x7 (The 24x7 was a recommendation in the report). RBI does not charge banks for interchange on NEFT, but NPCI does charge for IMPS. [0]: https://www.bloombergquint.com/business/npci-its-nue-competitor-and-the-push-for-retail-payments https://www.bloombergquint.com/business/npci-its-nue-competi... [1]: https://inc42.com/buzz/rbi-defers-its-plans-to-distribute-licence-for-nues/ https://inc42.com/buzz/rbi-defers-its-plans-to-distribute-li... [x]: https://dea.gov.in/sites/default/files/watal_report271216.pdf https://dea.gov.in/sites/default/files/watal_report271216.pd...
    - purple_turtle 5y ago
      > NPCI also is pushing heavily to move from a non-profit to a for-profit model This is unlikely to end well.
  - TheProbes 5y ago
    Because....because.....well....because THEN I COULDN'T SHILL YOU A CRYPTO TOKEN. There. I said it.
  - onion2k 5y ago
    It obviously costs money to banks to maintain the infra that makes UPI possible. Cash printing, distribution, and handling is super expensive. Replacing a big chunk of that with some servers and data costs would be a huge win. Plus they get all that valuable data about what everyone is doing...
  - sumedh 5y ago
    > What is so evil about a central bank? Don't know about India's central bank but US Fed plays with interest rates, bails out risk taking companies or their close friends creating moral hazard, prints money recklessly destroying your savings.
    - yashg 5y ago
      //US Fed plays with interest rates// That's what central banks are for. That's how they control inflation or make the wheels of economy moving by printing more money. That's literally the reason for their existence, controlling money supply in an economy.
      - sumedh 5y ago
        and by playing recklessly with interest rates, they inflate assets like stocks and real estate while destroy savings. While making these decisions they decide winners and losers and then privately trade stocks to get rich using insider information.
        johnsolo1701 5y ago
        But aren't most Americans' biggest asset their house, aka real estate? And their savings is their 401(k), aka the stock market?
        sumedh 5y ago
        Does the US Fed have a some kind of official charter saying that they will keep on inflating assets by keeping interest very very low?
vishnugupta 5y ago
Indeed, UPI is a culmination of several years of ground work laid before it (IMPS, Adhaar etc.,) Let me add one thing here though. > Low cost of payment infrastructure to the banks The cost is low primarily because it's is borne by tax payers [1] and the issuing banks. Issuing banks aren't too happy with forgoing a good chunk of their profits that they earn through issuing charges and also having to maintain the infrastructure free of cost. A new for-profit payment consortium [2] has been proposed to compete with NPCI. Will be interesting to see how this plays out. [1] https://www.business-standard.com/article/economy-policy/mdr-waiver-rbi-may-pay-rs-1-800-cr-to-banks-to-fund-free-transactions-120010701314_1.html https://www.business-standard.com/article/economy-policy/mdr... [2] https://m.rbi.org.in/scripts/bs_viewcontent.aspx?Id=3832 https://m.rbi.org.in/scripts/bs_viewcontent.aspx?Id=3832

xyst 5y ago

I could do without #5 to be honest. Should be working towards a more decentralized approach.

yashg 5y ago
Why this obsession with doing away with a central authority? What is so evil about a central bank? Decentralization is not cheap. I buy a pack of bread from a door-to-door bread and eggs salesman (Yes that's a thing in India). It costs INR 40 ($0.53). I pay him via UPI, he gets money instantly in his bank account with zero fees. He gets full INR 40 like I had paid him in cash. I don't think any decentralized system will be able to do that with zero fees. It obviously costs money to banks to maintain the infra that makes UPI possible. It still costs nothing for end users to use UPI. You know why is that? Because the Reserve Bank of India has mandated that. A central authority that grants banking licenses and oversees all banks in the country. Banks have to factor in the cost of supporting UPI as a regular cost of business. Banks actually may be saving money by supporting UPI because they don't have to deal with cash. They need less branches and ATMs, less people to handle all the cash. You remove the central authority, and it becomes anarchy.
- captn3m0 5y ago
  The GP's point isn't about RBI being a central authority, but about NPCI being granted a quasi-monopoly on retail payments despite being a non-government body. One of the important recommendations from the Watal Committee report[x] was to restructure the NPCI-relationship: 1. Change ownership structure. It was 75% owned by 10 banks in India, with no seats for other players in the industry. 2. Allow competition to NPCI. This got envisioned in the recent push for a NUE[0], but with a lot of caveats. RBI ended up deferring the plan[1] 3. NPCI also is pushing heavily to move from a non-profit to a for-profit model: https://www.livemint.com/news/india/npci-turning-for-profit-could-help-key-stakeholders-11609083399751.html https://www.livemint.com/news/india/npci-turning-for-profit-.... This will significantly change the current incentives it holds. As an example of this conflict, RBI runs NEFT and RTGS for free as near-realtime transaction platforms for free, and now 24x7 (The 24x7 was a recommendation in the report). RBI does not charge banks for interchange on NEFT, but NPCI does charge for IMPS. [0]: https://www.bloombergquint.com/business/npci-its-nue-competitor-and-the-push-for-retail-payments https://www.bloombergquint.com/business/npci-its-nue-competi... [1]: https://inc42.com/buzz/rbi-defers-its-plans-to-distribute-licence-for-nues/ https://inc42.com/buzz/rbi-defers-its-plans-to-distribute-li... [x]: https://dea.gov.in/sites/default/files/watal_report271216.pdf https://dea.gov.in/sites/default/files/watal_report271216.pd...
  - purple_turtle 5y ago
    > NPCI also is pushing heavily to move from a non-profit to a for-profit model This is unlikely to end well.
- TheProbes 5y ago
  Because....because.....well....because THEN I COULDN'T SHILL YOU A CRYPTO TOKEN. There. I said it.
- onion2k 5y ago
  It obviously costs money to banks to maintain the infra that makes UPI possible. Cash printing, distribution, and handling is super expensive. Replacing a big chunk of that with some servers and data costs would be a huge win. Plus they get all that valuable data about what everyone is doing...
- sumedh 5y ago
  > What is so evil about a central bank? Don't know about India's central bank but US Fed plays with interest rates, bails out risk taking companies or their close friends creating moral hazard, prints money recklessly destroying your savings.
  - yashg 5y ago
    //US Fed plays with interest rates// That's what central banks are for. That's how they control inflation or make the wheels of economy moving by printing more money. That's literally the reason for their existence, controlling money supply in an economy.
    - sumedh 5y ago
      and by playing recklessly with interest rates, they inflate assets like stocks and real estate while destroy savings. While making these decisions they decide winners and losers and then privately trade stocks to get rich using insider information.
      - johnsolo1701 5y ago
        But aren't most Americans' biggest asset their house, aka real estate? And their savings is their 401(k), aka the stock market?
        sumedh 5y ago
        Does the US Fed have a some kind of official charter saying that they will keep on inflating assets by keeping interest very very low?

vishnugupta 5y ago

Indeed, UPI is a culmination of several years of ground work laid before it (IMPS, Adhaar etc.,) Let me add one thing here though. > Low cost of payment infrastructure to the banks The cost is low primarily because it's is borne by tax payers [1] and the issuing banks. Issuing banks aren't too happy with forgoing a good chunk of their profits that they earn through issuing charges and also having to maintain the infrastructure free of cost. A new for-profit payment consortium [2] has been proposed to compete with NPCI. Will be interesting to see how this plays out. [1] https://www.business-standard.com/article/economy-policy/mdr-waiver-rbi-may-pay-rs-1-800-cr-to-banks-to-fund-free-transactions-120010701314_1.html https://www.business-standard.com/article/economy-policy/mdr... [2] https://m.rbi.org.in/scripts/bs_viewcontent.aspx?Id=3832 https://m.rbi.org.in/scripts/bs_viewcontent.aspx?Id=3832