UPI’s Volume Equals 10% Of India’s GDP: How India’s 1st Homegrown Tech Is Making The World Take Notice

This is a Guest Post by Mr. Mandar Agashe, Founder & Vice-Chairman, Sarvatra Technologies

Have you recently paused in the middle of a busy day to simply appreciate the ease with which you can simply scan a QR code and pay a restaurant bill?

Or pay for medicines from your local pharmacy from the comfort of your home without requiring exact change?

It is no less than a marvel!

UPI Completes 4 Years: An Ode To Its Brilliance

India must have arrived a bit late to the tech party, but in the last few years, things are moving at an exponential pace and the growth numbers are more impressive than any other economy in the world.

Be it unleashing a mobile revolution, outlaying the world’s largest biometric ID system or hosting the country’s largest number of startups, India’s tech economy is sprinting on a growth path rivaling major tech hubs across the globe, including the UK.

In the midst of this transformative digital revolution, India witnessed the rise and growth of the country’s first homegrown technology, which made the world to take notice.

It has been 4 years since banks have given public access to one of India’s great institutional and public policy innovations – the Unified Payment Interface (UPI), which has been integral in accelerating the process of financial inclusion in the country.

UPI’s Success In India Is Inspiring Other Countries Now

Recently, Google’s Vice President of Government Affairs and Public Policy Mark Isakowitz wrote to the Federal Reserve that they should follow
the successful model of the UPI based digital system built in India to build their own ‘FedNow’, calling it “thoughtfully planned”, and have lauded its path breaking design.

The mobile-based real-time payments platform allows users to pay from and directly into another individual’s bank account, through a secure, two-factor authentication system.

It congregates all bank accounts to a single application without being contingent on a consumer’s accessibility to debit or credit cards. Its unique ‘Virtual Payment Address’, allows consumers to identify themselves with someone they want to pay, without providing card or account details,
thus further lowering fraud risks.

What Makes UPI So Easy & Convenient?

The easy accessibility of the service, 24×7 interoperable features and direct transference are the key pillars of UPI’s soaring progress. UPI’s design also allows it to be highly scalable – both vertically and horizontally.

Additionally, being mobile-based, it further facilitates the government’s agenda to penetrate rural markets and bring them in the digital fold. Through UPI, India is serving as a significant testbed for frugal innovation through low-cost, large-value transactions.

In fact, its exponential growth story has been such that reports by NASSCOM and KPMG suggest that UPI is well on the path to accommodate allied offerings of – wealth management, insurance, and especially lending, considering a large chunk of Indians still lack viable credit history.

Besides ease of access and great user interface, scalability is another advantage of this platform. The UPI model is such that it can be integrated into a Platform as a services (PAAS) model whereby even Small Finance Banks and Urban Co-operative Banks in semi -urban rural
India can be brought onboard.

This will enable the rural customers of Banks in India to use the
various UPI PSP Aps like Google Pay by linking their accounts in the Co-operative Banks to UPI.

Indian Merchant’ Best Friend: UPI

The success of UPI is also based on the fact that it benefits the merchants as well. In 2018, UPI 2.0 was launched, which was more merchant-centric. Features like the ability to pre-authorize a transaction and the option to pay later was mutually beneficial to both customers and merchants.

Besides the ability to link overdraft accounts on UPI, will fuelled more transactions in the ecosystem while stronger verification further reduces frauds.

This combined with the announcement of the MDR charges waiver for RuPay and UPI payments are sure to catalyse the growth multifold, by incentivizing consumers to use digital payments.

The simplicity of this innovation has been the flag-bearer of transformation in the country. Four years since its introduction, it has crossed 12 billion transactions amounting to over 21 trillion rupees, and accounts for over 50% of all digital transactions in India – 10% of the GDP.

Tech giants like Google and PhonePe capitalized on it by launching their own UPI-enabled payment platforms to leverage its arsenal, further boosting its widespread implementation, especially in the P2P sector.

India now has an underlying infrastructure core on which many fintech firms can blossom and a lot of innovation can happen. These provide a good foundation for fintech companies to permeate last-mile touch points.

It may just be the most sweeping revolution you’ve never heard of. As the world is transfixed by China’s digital advancements, its internet juggernauts and frenetic innovation in the last decade, India is undergoing its own upheaval measured in terabytes, largely away from the international media spotlight.

Digitisation has the potential to lay out a level playing field and reduce the gender and wealth gaps thus having a greater impact on the society in the years to come.