NPCI launches Unified Payments Interface

The interface will allow account holders across banks to send and receive money from their smartphones without entering bank account details


Any kind of payment, including for shopping and paying taxi fares, can be done using an application downloaded on a smartphone once all banks adopt the system.
Any kind of payment, including for shopping and paying taxi fares, can be done using an application downloaded on a smartphone once all banks adopt the system.

Mumbai: Mobile phones will soon double up as virtual debit cards after National Payments Corporation of India (NPCI) launched its unified payments interface on Wednesday.

The interface will allow account holders across banks to send and receive money from their smartphones using just their Aadhaar unique identity number, mobile phone number or virtual payments address without entering bank account details.

Any kind of payment, including for shopping and paying taxi fares, can be done using an application downloaded on a smartphone once all banks adopt the system. The pilot project will be launched in about four-five months, managing director and chief executive officer A.P. Hota said.

“Reserve Bank of India governor Raghuram Rajan, who was present at the launch programme on Wednesday, said the new facility will help the central bank to achieve its agenda of cashless transactions,” Hota said. Media was not allowed in Rajan’s session.

According to RBI’s estimates, the cash floating in the system is about 18% of the country’s gross domestic product, making India as one of the most printed currency-dependent country in the world.

NPCI’s unified payments interface will leverage on the technology used in Immediate Payment Service (IMPS), which allows a customer to transfer money in an instant, anytime.

“It is a kind of layer that will allow interoperability, sitting atop the existing infrastructure of banks. Once it is adopted by all banks, money can be transferred from a bank to any other bank using a mobile phone,” said Nandan Nilekani, former chairman of Unique Identification Authority of India (UIDAI). Nilekani will now be the honorary advisor on innovation and public policy to NPCI.

A transaction can be easily executed through the unified payments interface. for instance, a person travelling by a taxi will have to give his Aadhaar number, cellphone number, or even just an e-mail id to the driver. The driver will key in the fare details and a text will come to the customer. The customer will have to key in his mobile phone ID or bank ATM pin to complete the transaction.

In about a year-and a half, all smartphones will have biometric authentication facility, and the customer then can also execute the transaction using his fingerprints. The fingerprints will be cross checked with the biometric database with Unique Identification Authority of India (UIDAI) database. Once verified, the transaction will be executed in an instant.

Nilekani said the security is fool-proof as the transaction will happen in a highly encrypted format.

Already NPCI’s IMPS network handles more than Rs.8,000 crore worth of transactions a day, which will experientially increase with the use of mobile phones.

There are 760 million Aadhaar cards, and with 26 million of Aadhaar numbers getting added every month, soon the total Aadhaar card issuance will touch a billion by next year, Nilekani said. Out of India’s 900 million mobile phones, 120 million are smartphones and the share is increasing exponentially.

The unified payments interface will revolutionise the e-commerce space, which according to Boston Consulting Group estimates, is scheduled to grow to $60-70 billion in the next three-four years, from $16-17 billion now. “Besides, remittances and government schemes like direct benefit transfer will get a big boost with this kind of hassle free payments system,” said Hota.

According to Ramu Annamalai Ramsamy, managing director of GI Technology Pvt. Ltd, a company that has applied for payments bank license with the RBI, using mobile phones to do banking will help the upcoming payments banks in doing business as customers will have awareness in adopting modern technology for banking.

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