Retracing the history of UNIFIED PAYMENT INTERFACE(UPI)

I am no one in particular.

I am more ordinary than every other engineer who claims he is a software engineer. What got me enthused around 2008-12 was the speed up of aadhaar project and the possibility of widespread electronic payments.

Cashless means of payment were expected to reduce high levels of corruption in the society. The rollout of aadhaar gave a hope in the administrators that finally India could see a cashless or at least a less cash economy.

Around Oct,2013 the RBI set up a committee that went into payments invited suggestions for popularizing mobile banking. The committee also consisted of Mr. Dilip Asbe the then COO of NPCI.

These were the terms of reference of the Mobile Banking Committee:

The Reserve Bank of India has announced the constitution of a Technical Committee on Mobile Banking, to examine the options/alternatives including the feasibility of using encrypted SMS based funds transfer using an application that can run on any type of handset for expansion of mobile banking in the country.

Terms of Reference of the Committee are:

a. to conduct an in-depth study of the challenges faced by banks in taking mobile banking forward to the desired level;

b. to study the challenges faced by banks in introducing the Unstructured Supplementary Service Data (USSD) channel and suggest solutions, if any, to take this forward;

c. to consider the advantages/challenges of having a single application across all handsets in an SMS encrypted environment;

d. to examine any other optimum solution that would take mobile banking to every nook and corner of the country; and accordingly,

e. to draw up a road map for implementation of the solutions/options recommended

The Reserve Bank of India, Department of Payment and Settlement Systems, Central Office, Mumbai had invited the public to comment on the said move. The committee notification was issued by Ajit Singh, AGM, RBI on Oct 9th.

It is widely believed that Unified Payment Interface took birth as a consequence of the ideas and deliberations and of this committee report.

It is not clear after Jan,2014 when this report was available to April 12th,2016 when UPI was formally launched what all happened. If you search this committee report you will not find any reference to the word Unified Payments Interface(UPI).

Google claims it was consulted on the design of UPI to the federal reserve. So we can conclude that the birth of UPI as well as the idea of demonetization were well kept secrets. That both were connected was known even during Demo since the goal of promoting cashless payments was added to the motivations behind Demonetization.

Just look at these statistics around the few months of the year 2020 on the prevalence of UPI among the population.

This is October, November and December

This is July, August and September

This is March, April and May

This is Dec,2019 - Feb,2020

If we plot these trends which are obviously going up,

The latest news from the UPI stable is that transaction value has crossed 5 lakh crore(5 trillion rupees which is approx. 66 billion dollars worth of transactions every month)