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NPCI launches Unified Payment Interface

2015-02-18_180844National Payments Corporation of India (NPCI) is implementing a ‘Unified Payment Interface’ to simplify and provide a single interface across all payment systems thereby enabling all account holders to send and receive money from their smartphones with a single identifier – Aadhaar number or mobile number or virtual payments address – without entering any bank account information.

A.P. Hota, MD & CEO, NPCI, said this unified layer, which offers next generation peer-to-peer immediate payment just by using personal phone, uses existing systems such as IMPS, AEPS, to ensure settlement across accounts. “The usages of existing systems ensure reliability of payment transactions across various channels,” he added.

NPCI presented live demo transactions involving a few select banks at an event. Dr Raghuram Rajan, governor, Reserve Bank of India, formally inaugurated the system. Among the guests attending the event were Nandan Nilekani, ex-Chairman, UIDAI, Mrs V.R. Iyer, CMD of Bank of India, Balachandran M, chairman, NPCI and Chanda Kochhar, MD and CEO, ICICI Bank.

NPCI said in a release that the unified payment interface (UPI) is a standardized, innovative, adoptable, secure and cost-effective interface. Once formulated, the standardized API, designed for enabling different forms of payment beneficial for mobile application, and other channels, can be integrated into the NPCI infrastructure. It is intended to make payments possible only by providing an address with others without having ever provided account details or credentials on 3rd party applications or websites. It also has ability for sending collect requests to others (person to person or entity to person) with “pay by” date to allow payment requests to be “snoozed” and paid later before expiry date without having to block the money in the account until customer is ready to pay.

It can use a personal mobile phone to “pay” someone (push) as well as “collect” from someone (pull). The user can pre-authorize multiple recurring payments similar to ECS (utilities, school fees, subscriptions, etc.) with a one-time secure authentication and rule based access. In addition, it has the ability to pay and collect using ‘virtual payment addresses’ that are ‘aliases’ to accounts that may be payee/amount/time limited providing further security features. It can also have PSP provided mobile applications that allow paying from any account using any number of virtual addresses using credentials such as passwords, PINs, or biometrics (on phone).

The key drivers of the interface are:

  • It makes possible paying and receiving payments as easy as swiping a phone book entry and making a call on mobile phone;
  • Everyone who has an account should be able to send and receive money from their mobile phone with just an identifier without having any other bank/account details;
  • The unified layer should allow application providers to take advantage of enhancements in mobile devices, provide integrated payments on new consumer devices provide innovative user interface features, take advantage of newer authentication services, etc; and
  • It allows banks and other payment players to focus on core business and allow half a billion phones to be the primary payment device in conjunction with other 3rd party authentication.

Speaking at the event, Nandan Nilekani said at present there are Rs8000 crore worth of transactions done in a month, while Rs 1 crore worth of transactions a month are already on IMPS. He hoped in these circumstance and with the commitment of NPCI, it will be a matter of time for UPI to be adopted into the system.

He said today Iris cameras cost less thatn $5 and mobile phones incorporating Iris cameras can be available at less that $100, which will enhance the adoption of mobiles in transactions. He said the following factors will fuel increased adoption of UPI: (a) rise of smart phones (20 million phones added in a quarter) (b) direct benefits transfer, which will pave the way for increased adoption of e-commerce in next 3 to 4 years and (c) the proposed setting up of payment banks.

He also mentioned that a national tolling system can be developed linking it to UPI. ICICI Bank has already rolled RFID based system to collect tolls.

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