Google: India's Unified Payment Interface (UPI) is better than the US

Google is praising India's Unified Payment Interface (UPI), and it wants the US Federal Reserve to follow India and implement a similar real-time payments platform. Mark Isakowitz, Google vice president, government affairs and public policy, US, Canada to the Federal Reserve Financial Services Policy Committee, wrote a letter on November 7. India's UPI system was built by National Payments Corporation of India (NPCI).

The company has also shared its learnings from the UPI with the US government. Google also shared the success of its payments app, Google Pay, in India. "Google has been a successful market participant in India's use of UPI, and Google Pay provides one of the three leading mobile applications that use UPI, as measured by transaction volume," the letter explained.

Here are the five reasons why Google thinks the US needs to learn India's digital payments system...

1. "India's UPI was thoughtfully planned...." and the reason behind its success is critical aspects of its design

UPI was thoughtfully planned, and critical aspects of its design led to its success. The letter says, "First, UPI is an interbank transfer system (there are now over 140 member banks, after initially launching with nine participating banks). Second, it is a real-time system..."

2. It is "open" system on which companies can build apps that users can directly manage.

"India's UPI system is an open system on which technology companies can build apps that help users directly manage transfers into and out of their bank accounts", says the letter.

3. The annual run rate of transactions flowing through UPI is around 10% of India's GDP.

"Just after three years, the annual run rate of transactions flowing through UPI is about 10% of India's GDP. This includes 800 million monthly transactions valued at $19 billion. India's monthly UPI transactions have grown 56 times in just two years, from 17M in August 2017 to 955M in September 2019", the letter further added.

4. UPI in India has worked for banks, consumers, other players within the payment ecosystem.

"The approach in India attained amazing results for banks, consumers, other players within the payment ecosystem and India's central bank. Adoption of the system was rapid, growing from 100,000 monthly transactions, to 77 million, to 480 million, to 1.15 billion monthly transactions in the first four years," says Google in the letter.

5. Supports real-time both low-value as well as high-value payments and uses standardised messaging protocols with extended metadata.