The scale of UPI payments is unprecedented. Perhaps the best payment system in the world by far. My friends who come from US are always awe struck by the pervasiveness and easy of use of UPI payments. They want it so bad in the West!
I think the main takeaway is that phones and capable app ecosystems was a "hidden" disruption enabler vis-a-vis the traditional credit card processing companies that various actors in various countries has taken advantage of now, the big question is if/when they will make this internationally interoperable (considering the trouble foreigners in Sweden has with being excluded from these "easy" payments that at best requires a card or at worst cash it's an area that needs fixing).
Still for those involved they wouldn't probably care too much as long as there isn't real-time reporting to the police to get events shut down (although with laxer laws in that area that'll probably fade as an concern).
Haven't needed my checkbook in many years now, almost everywhere has tap-to-pay and the rare place which doesn't has a chip reader.
But calling it the "best payment system in the world"! And west wants it so bad sounds like blind exaggerations.
United States is not the only western country. Scandinavian countries has Swish (2012), Vipps (2013), and Mobile pay (2015), Canada has Interac.
Most growth in payments is either new markets or markets that grow a lot, but not completion of rather mature markets (and additional services).
1: You follow a link on your phone that opens the app, you're prompted with the transaction sum and then sign with a code on the phone and done.
2: You scan a QR code (from sign or screen), opens a prompt in app for the sum, sign and done
3: Person-to-person, you enter their phone number(often from the phone book), amount and message, sign and done.
The signing is done via the standard app that's also used to login to the tax-office,etc so the entire population has it.
1. A 100x higher volume on a normal day.
2. A highly effective and equitable system that somehow managed to succeed in one of the most corrupt and beauracratic nations.
3. The majority of its users can barely read, if at all. Not to mention all the languages involved.
UPI is impressive because it actually made a difference in the lives of the poor. Probably the first piece of internet technology to have a measurable effect on the lives of hundreds of millions of people.
So yeah the case sounds rested in my perspective.
EDIT: also sounds like Swish charges a fee to the banks? Sounds a bit outrageous for a payment system trying to be the best in the world to charge a fee.
FWIW, NPCI charges all banks for UPI too. They’ve been eating most of those costs because the government didn’t allow them to charge (now those charges are slowly coming in). Banks haven’t been happy with the zero MDR regime for UPI.
Doesn’t apply for transactions less than ₹2000 ($24 usd). Might sound like a small amount but most Indian transactions won’t cross that. And the fee doesn’t apply to p2p anyway.
Nr 2 though is something that I think might be a reverse though, looking globally mobile payments seems to have been a hit in markets with less well functioning traditional money and credit/debit card markets.
In Sweden cards's (most often debit) with tap-to-pay still rules for most b2c cases like established restaurants, stores and anything with slightly higher value. Swish was mostly started out to facilitate non-commercial person-to-person cases but has now displaced most lower value cash usage (person to person, small vendors, temporary venues).
I frankly don't even know if I have physical money in my wallet anymore since.. well I've not used physical money in a couple of years now iirc.
In US NFC is best and seamless since most people have high end phones. In India maybe UPI with QR code is better solution since you only need phone with a camera.
UPI is directly connected to your bank account. It does not go through VISA, Mastercard or whatever.
In my experience paying with credit is a fire and forget action, since the money is debited automatically at the end of the month, with no interest. The UX is great, since it only takes a card swipe [as long as I have the funds to pay it back and I'm within my credit limit].
In an scenario where you are not debited right away, I agree completely. But I would only expect that to happen by accident or if the user lacks the financial literacy to understand there are better ways to buy whatever they want. I may be missing some financial corner cases.
what debt?
> UPI is directly connected to your bank account.
oh, then it's a hard pass from me. i do not connect anything to my bank account and keep cards in separate banks for security.
You are taking debt whenever you use credit card. If you miss/forget payment, some tech fault or sometimes just because you can be charged hefty interest or charges.
You can keep a separate account for your daily transactions.
most people i know have debit cards.
You can have other (non credit, say savings) bank accounts for security too. It's just as easy (or easier) as getting a credit card here (in India).
i understand where the confusion comes from. i use the term “credit card” generically for debit and credit cards. sorry for the confusion.
No, because after a month, there will be an automatic payment from my bank for the balance. In that time, the bank is giving me their money and they’re on the hook for any fraud.
This is technically incorrect. UPI is connected to NPCI, which runs the platform and charges the participating banks for this service. Same for RuPay cards by NPCI.
With credit card, it isn't my money for a month until I have to make the payment. If there is a problem, I can chargeback. The possibility of chargeback makes the vendor's support more helpful
Then again, I don’t see much need for that when I can just NFC pretty much everywhere (of course the merchant still ends up paying up to 1% on every transaction)
So until there is some standardised comparison probably making any statements about merits or demerits, including mine are just opinions without facts.
However, I've spent a lot of time studying the payments space (7+ years now!) and I'll quickly give you 3 reasons why UPI is "better" than Interrac for example :
1) Better User Experience
Systems like Interrac enable instant bank to bank transfers. However, they don't allow for third party applications to initiate payment requests / view balances. Customers are restricted to choosing a bank and sticking with the user experience defined by the bankers.
UPI , on the other hand, mandates banks to accept and honor payment requests generated from "Third-party payment application providers (TPAPs)"
This allows for a much larger variety of payment experiences to be designed, which can be "fit on top" of the existing banking layer.
PSD2 regulations, in Europe tried to achieve this effect, however most banks ended up implementing a custom version of the protocol instead of adoption a common standard.
2) Lower costs
Adoption of the UPI payments system has massively reduced the cost of sending money anywhere across India.
For Indian banks, the cost of sending money via UPI is wayy less than the "Gas fees" required to facilitate crypto transactions or the fees charged by VISA/MC networks to facilitate transactions.
Similarly, costs for a merchant to accept UPI payments are much lesser than accepting any other form of digital payment today (in India and maybe the world).
3) Federated Architecture
From Day-1, the UPI ecosystem has been design to support multiple switch providers, payment institutions and local regulations.
If countries like France, adopt UPI, they won't have to depend on centralized servers hosted in India to run their payments technology.
All their data can be hosted in servers within the country and the UPI instance facilitating French transactions can be tailored to honor local regulations and limits.
This flexibility is not as easy to implement with older payment systems (like VISA/MC).
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Much of this can also be attributed to the fact that the other payment systems were developed 15+ years ago.
The recently launched, FedNow system adopts a similar approach to UPI. Will be interesting to see how it evolves
I don’t need to open another account, fumble with one-more-app or anything. Also apple-pay appears to mask my CC/DC number as well, so better safety.
I want it everywhere badly in west as well as east and middle(-east).
I am familiar with UPI and few similar things in other neighbouring countries(looks like every SEA country has its own entirely different version of it and some country has almost 4-6 competing copy-cats!).
Then again, we don't really the regulation framework for making me feel like cell phones are a safe way to move money around. (Because I have trust issues with tech.)
It's already there.
With the exception of the US, almost every country I've traveled to in the Middle East, Asia, and Europe has tap-pay enabled. The Middle East has virtually everyone paying with their phones via NFC. In India Apple Pay doesn't work but when I travel there I can use my phone every time. NFC cards are also the norm.
The government aggressively manages the system to prevent any single company from getting too much weight and forces them to address scams or other system occurs in almost real time by the threat of being thrown off the rails.
It’s actually shocking that only a few years ago RBI was concerned about concentration risk of having NPCI (the platform operator of UPI) and invited proposals from banks and companies for NUE (New Umbrella Entity) licenses. Then something changed and it canceled all those proposals.
NPCI has a monopoly on instant fund transfers (leaving aside the RBI run RTGS). NPCI wants to limit concentration risk among its clients by trying to push for lower market share among competitors within its platform, like Google Pay or WhatsApp Pay.
As for scams, there are plenty of them on UPI every single day, and there’s no way to get any fraudulently transferred funds back without filing a police complaint and waiting for them to do their jobs (and greasing their palms depending on the amount for the job to be done).
And most UPI are linked with phone number, so you can also pay via phone number if UPI is linked with it.
it's literally one of the least secure things you can have.
I guess in Europe there is just much less demand for systems like this because NFC terminals are you ubiquitous.
i don’t think so. in the UK NFC payments via the phone’s wallet are ubiquitous.