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Why peer to peer digital payment system UPI should remain free in India

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Re: Why peer to peer digital payment system UPI should remain free in India

#21

Post by salawat »

deepakshenoy wrote: post #13
signal11 wrote: post #5

Earlier quoted context omitted.

Hey Deepak, I saw your comments about this on Twitter, and it’s good to see this article as well. Personally I don’t think UPI will ever go to a fully-paid model, but I’d love to know what you think about the potential for a “freemium” model, eg with payment protection or improved anti fraud built in. My sense is that combating fraud/abuse costs money and currently UPI essentially relies on the customer not making mi…

A freemium service can already be built with a payment escrow for anti fraud protection, for willing merchants and customers. Fighting fraud is useful for banks to invest regardless of whether it's UPI or not, I'm not sure if you need separate models for UPI. Request abuse is pretty easy to track i imagine, for any bank or even for npci...and npci has a big profit pool. Indeed internet shutdowns are a problem but i t…

>Indeed internet shutdowns are a problem but i think the state will have to move out of shutdowns as UPI gets popular. You are right, that is a pain.

They will not. They will double down. They will develop tooling to shut down just the people they need to to cripple any movement, and if you don't think they will, just look at the U.S.

Re: Why peer to peer digital payment system UPI should remain free in India

#22

Post by akritrime »

deepakshenoy wrote: post #13
signal11 wrote: post #5

Earlier quoted context omitted.

Hey Deepak, I saw your comments about this on Twitter, and it’s good to see this article as well. Personally I don’t think UPI will ever go to a fully-paid model, but I’d love to know what you think about the potential for a “freemium” model, eg with payment protection or improved anti fraud built in. My sense is that combating fraud/abuse costs money and currently UPI essentially relies on the customer not making mi…

A freemium service can already be built with a payment escrow for anti fraud protection, for willing merchants and customers. Fighting fraud is useful for banks to invest regardless of whether it's UPI or not, I'm not sure if you need separate models for UPI. Request abuse is pretty easy to track i imagine, for any bank or even for npci...and npci has a big profit pool. Indeed internet shutdowns are a problem but i t…

In before someone recommends building UPI on the blockchain and having region specific rollups to settle transactions offchain, that also uses a bluetooth mesh network to communicate with all nodes.

(just a joke, this won't work due to limitations of data storage and blockspace, without even going into the can of worms that is governments interacting with a "independent" blockchain)

Re: Why peer to peer digital payment system UPI should remain free in India

#23

Post by MAMAMassakali »

ignoramous wrote: post #17
sudhirj wrote: post #16

A lakh is 100,000 and a crore is 10 million, or 10,000,000. In India, the next order of magnitude after 10,000 is one lakh (hundred thousand) and a crore is a hundred lakhs (100 x 100,000 or 10M).

The context is UPI ... has reached volumes of 10 lakh crore rupees per month 1,000,000 * 10,000,000 => 1E13/mo rupees => $125,000,000,000/mo Google, Facebook, Amazon, Walmart are all shareholders in the parent company that runs UPI along with some 19 other Indian banks.

UPI is owned by NPCI(National Payments Corporation of India) which in turn is owned 67 share holders. Top 10 share holders are major banks and they hold around 80% shares. Other owners are smaller banks, other non banking financial institutions and Google(GooglePay), Amazon(AmazonPay), Flipkart/Walmart(PhonePe) etc.

Re: Why peer to peer digital payment system UPI should remain free in India

#24

Post by bergenty »

wtmt wrote: post #14
bergenty wrote: post #11

Earlier quoted context omitted.

What happens if you lose your phone? There must be some way to transfer the account right?

UPI is not a money holding account by itself. It’s an identifier for your bank account. You can have multiple identifiers for the same bank account (like email aliases pointing to one mailbox). UPI is primarily available on smartphones through an app. The setup process involves the UPI app (could be bank’s app or a third party app like Google Pay) sending an SMS with a specific code to NPCI (the private consortium op…

How do you validate yourself as the owner of the bank account especially if that validation happens over SMS? Is there a password or pin that is secret?

Or do you have to go to the bank website and initiate an SMS send to your new phone? How are very rural people able to navigate all that complexity given how prevalent UPI is at this point?

Re: Why peer to peer digital payment system UPI should remain free in India

#25

Post by 2Gkashmiri »

bergenty wrote: post #24
wtmt wrote: post #14

Earlier quoted context omitted.

UPI is not a money holding account by itself. It’s an identifier for your bank account. You can have multiple identifiers for the same bank account (like email aliases pointing to one mailbox). UPI is primarily available on smartphones through an app. The setup process involves the UPI app (could be bank’s app or a third party app like Google Pay) sending an SMS with a specific code to NPCI (the private consortium op…

How do you validate yourself as the owner of the bank account especially if that validation happens over SMS? Is there a password or pin that is secret? Or do you have to go to the bank website and initiate an SMS send to your new phone? How are very rural people able to navigate all that complexity given how prevalent UPI is at this point?

its like this.

your bank account has a phone number linked to it. in normal cases here is the workflow.

you install UPI. UPI app sends sms verfiying your mobile. app lists all banks. you select your "bank". you set pin. done.

Re: Why peer to peer digital payment system UPI should remain free in India

#26

Post by 2Gkashmiri »

bergenty wrote: post #24
wtmt wrote: post #14

Earlier quoted context omitted.

UPI is not a money holding account by itself. It’s an identifier for your bank account. You can have multiple identifiers for the same bank account (like email aliases pointing to one mailbox). UPI is primarily available on smartphones through an app. The setup process involves the UPI app (could be bank’s app or a third party app like Google Pay) sending an SMS with a specific code to NPCI (the private consortium op…

How do you validate yourself as the owner of the bank account especially if that validation happens over SMS? Is there a password or pin that is secret? Or do you have to go to the bank website and initiate an SMS send to your new phone? How are very rural people able to navigate all that complexity given how prevalent UPI is at this point?

even illiterate people are able to navigate a cell phone. take for example infants or 1-2 yo kids. they cant read, cant speak but they can open youtube and even reach their favorite video.

Re: Why peer to peer digital payment system UPI should remain free in India

#27

Post by nmzaheer »

bergenty wrote: post #24
wtmt wrote: post #14

Earlier quoted context omitted.

UPI is not a money holding account by itself. It’s an identifier for your bank account. You can have multiple identifiers for the same bank account (like email aliases pointing to one mailbox). UPI is primarily available on smartphones through an app. The setup process involves the UPI app (could be bank’s app or a third party app like Google Pay) sending an SMS with a specific code to NPCI (the private consortium op…

How do you validate yourself as the owner of the bank account especially if that validation happens over SMS? Is there a password or pin that is secret? Or do you have to go to the bank website and initiate an SMS send to your new phone? How are very rural people able to navigate all that complexity given how prevalent UPI is at this point?

It a two factor authentication system.

One is your mobile number i.e. the UPI app first verifies whether the number belongs to you and it is being sent from the same device. To do that, it auto sends a encoded SMS to the NPCI server and awaits a response on the same device (no provision to manually enter the response. It has to be auto read by the app). This ensures that nobody else can claim ownership of that mobile number.

Having known that you own the number, it allows you to link your bank account to the UPI ID. This mechanism involves again sending a SMS to the bank server to verify whether an account exists that is linked to the mobile number you just proved that you possess. If that is true, then you need to prove that you own the bank account. This is done by asking you to enter your debit card details along with the ATM PIN. If that is successful, then that bank account is linked to the UPI ID you just created. Further, the app now forces you to set a UPI PIN that can/is different from your ATM PIN. Now you can perform UPI transactions with your UPI PIN.

Re: Why peer to peer digital payment system UPI should remain free in India

#28

Post by potamic »

deepakshenoy wrote: post #4

Thanks very much! I would love to hear your comments. I think UPI is incredible and well loved because it's free - putting a toll on something moving at this insane speed is just going to slow it down tremendously.

Payments ultimately keep the economy running, and it's in the government's best interests to make sure there is as little friction as possible here. But I'm not sure it should be free. Because there is always a cost to things. If UPI is "free" then it is being funded by the taxpayers. The problem with that is, it's not very equitable distribution of cost. People who use payments less, are funding it on behalf of people who use them a lot, who ironically are able to contribute more tax. A usage based fee is essentially a service tax which many would argue is a fairer form of taxation than fixed tax.

Re: Why peer to peer digital payment system UPI should remain free in India

#30

Post by pdrojack »

MichaelZuo wrote: post #20

Cmd+F to find ‘liability’ and the word only appears once in the very bottom disclaimer explaining that the author does not accept ‘liability’ for anything written. I guess the topic of who has liability for this financial system, and the cost of that liability, is too unimportant to be worth mentioning? e.g. In case of a breach of personal information, transaction records, etc., who would be held responsible?

The Bank where you account is.
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