India’s UPI needs to work on another UPI

The financial services sector in India is at it again; at least the regulators and the mainstream business publications are. Talking up UPI (Unified Payments Interface) as a panacea for India’s challenges with financial inclusion, cash economy (read black money), plateauing digital ecosystem and you name it. 

UPI, for the uninitiated, is a simple interface allowing easy authentication for sub Rs 100,000 payments and money transfers.  For UPI to be the bearer of all the supernatural outcomes being imputed to it, Universalization, Protection and Integration (UPI) will be of utmost significance. These will be fundamental to driving UPI’s adoption and consequent success of the desired outcomes.

Universalization:  Regulators (BFSI and Telecom) need to take the initiative to ensure that the UPI app or feature is pre-loaded into mobile hardware or SIMs. Regulators should also work with mobile operating system providers to ensure existing hardware is updated with the UPI app. Universalization of the app on almost all capable hardware will ensure that the very first hurdle to adoption-accessibility, is taken care of.

Protection: The second common hurdle to adoption of digital payments is the common perception that these channels are vulnerable to security threats. The success of the UPI will rest with the cyber security architecture of all stakeholders of the payments ecosystem in the country. This will include banks, switch providers, card issuers, merchants, consumers, device manufacturers, telecom providers etc.  An agency that architects, implements and monitors the security posture requirements from various stakeholders will be key to ensuring greater adoption of UPI.

Integration: Integration with merchants (both offline and online) and providers will be important for the adoption of the interface. More number of merchants and providers (such as banks, payment gateways etc.) latching onto the UPI will signal greater availability, ease and acceptance for consumers. Interestingly, UPI will also need hardware and software level integration in various mobile devices. Ensuring device and system neutrality through appropriate integration will be key to drive adoption.

Universalization, protection and integration or UPI is what India needs to train its eyes on for the original UPI to succeed.