Unified Payment Interface: Towards Greater Cyber Sovereignty (OpenAlex (recherche mondiale))

Summary

• In June 2020, UPI recorded more than 1.34 billion transactions amounting to almost US$35 billion.p.2
• India's centralised biometric identification system, Aadhaar, covers 88.6 percent of the total population.p.4
• In 2016, NPCI expanded its shareholding base to 56 banks, with public-sector banks holding 57 percent of equity.p.6
• In January 2020, the Reserve Bank of India approved recurring electronic mandates on UPI with a maximum cap of INR 2,000 per payment.p.6
• BHIM's market share of all UPI transactions by volume shrank from 45 percent in 2016 to 5.37 percent by March 2020.p.7

Key insights

1. Google requested the US Federal Reserve Board in December 2019 to emulate India's UPI model when building FedNow.p.3
2. The UPI system operates on a four-party model connecting consumer applications, payment service provider banks, NPCI, and account institutions.p.4
3. The absence of tokenisation in Aadhaar identification data increases financial fraud risks for UPI users across connected applications.p.4
4. NPCI's introduction of the BHIM app created market friction by placing the network operator in direct competition with private app providers.p.7
5. Foreign technology platforms like Google Pay and PhonePe have established leading market positions in the Indian UPI ecosystem.p.7
6. Enforcing a zero Merchant Discount Rate without regulatory subsidies threatens the commercial sustainability of digital payment providers.p.10
7. NPCI established an international subsidiary to export UPI technology and architecture to other central banks and nations.p.10