What Nandan Nilekani described as the Whatsapp moment in financial services has arrived with RBI giving the nod for the United Payments Interface to go live. As this platform allows money to be transferred across mobile banking apps, businesses and individuals are expected to rapidly find ways to use this for payments and use less cash.
Two key features of this platform are: UPI enabled apps are interoperable. What this means is that just as ATM of one bank can be used to access accounts of all banks in the network, any UPI-enabled app can be used to access accounts of other banks. Second, it overcomes one of the biggest pain points in sending money online — that of obtaining and entering 15-digit account numbers and 11 digit ifsc code. Instead of account details, the receiver has to merely share an alias like xyz@axisbank. Twenty one banks will be going live over the next couple of days. But largest bank SBI has expressed concerns and has kept on hold until he clarifies.
“Real-time sending and receiving money through a mobile application at such a scale on inter-operable basis had not been attempted anywhere else in the world. Now the UPI app will be made available on Google Play Store by banks,” NPCI Managing Director and CEO A P Hota said in a statement issued here today. Open Access, which is the use by a third-party of an existing financial network for payments has been implemented in certain sectors and in pilot projects in countries like Australia, Malaysia, Singapore, but not at the scale at which NPCI is rooting for. “While there are debates raging in the European Union as to the merits of open access, it is brilliant what NPCI has managed to implement in such a short timeframe,” Suresh Rajagopalan, president – software products, FSS.
Of the 21 banks, Andhra Bank, Axis Bank, Bank of Maharashtra, Bhartiya Mahila Bank, Canara Bank, Oriental Bank of Commerce, Union Bank of India and Vijaya Bank have gone live.
“Our application is still under development. We have raised some security concerns on registration process and transactions timed out.NPCI has not yet come back. We will be ready by end-September. But decision to join will depend on NPCI coming back to us on clarifications sought,” said Manju Agarwal, deputy managing director, SBI.
Earlier customers with smallers banks were at a disadvantage when it came to mobile banking and state-of-the-art apps. “UPI is a very innovative product that will result in a lot more users and higher online transaction volumes. Smaller banks, who don’t invest in IT as heavily as their larger counterparts, will now be able to offer its customers the same benefits as everyone else,” Rajagopalan, FSS.
Nilekani, an advisor to NPCI, has been one of the biggest champions of UPI. He has been pushing for UPI as part of the India stack — an entire range of digital services which includes Aadhaar for authentication, e-KYC , digital lockers and e-signatures that will enable all transactions to be done online.