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UPI: Anatomy of a Payment Transaction

timeseriesofindia.com

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Re: UPI: Anatomy of a Payment Transaction

#81

Post by stAInley »

drewfax wrote: post #62

Yes, UPI works. But it's a terrible system for privacy and autonomy. It has so many intermediaries, requires phone number and linked to person's identity. It should not be called a peer-to-peer payment system in anyway. It is controlled by the government rather than Visa or Mastercard. That's the only the difference.

Sure, but visa and mastercard share their transactions with the US government (among others). "Hot Watch": where the US gov gets real time surveillance on a target. Bank Secrecy Act: where private networks and their issuing banks are legally mandated to act as unpaid deputies for the state. At least with UPI you're sharing with less governments?

Re: UPI: Anatomy of a Payment Transaction

#82

Post by AugustoCAS »

arter45 wrote: post #10
pzmarzly wrote: post #2

22B transactions a year mean an average of ~700 QPS for the NPCI switch. Of course the traffic is not uniform, it probably peaks at many times that number, but that still doesn't sound that bad - for comparison, a quick Google tells me Nasdaq TotalView ITCH feed peaks at 100k+ QPS at market open.

A great lesson for system design job interviews - if this is a popular payment system in a country with 1.5 billion people, your theoretical system you're designing for a small company cargo culting Google interviews will not likely support millions or even tens of thousands of average TPS.

To add - I agree that payments is great question for systems designs.

Merchants need to receive the money and being able to transact with it. Imagine the merchant receiving the payment is something like Amazon or Ebay (sorry, I don't know what similar large online retailers are in India).

With the above, the problem becomes harder. Imagine receiving 2-3k TPS just on one account during a black Friday or similar day.

Now your system has to perform fine for accounts that do 30 transactions an hour for a retail customer and 3k a second for a merchant.

Re: UPI: Anatomy of a Payment Transaction

#83

Post by treenode »

dominotw wrote: post #40
elendilm wrote: post #17

I have the utmost respect to people who makes UPI work. Made even the old people in the nation completely go digital for payments - a feat unparalleled in the world.

it worked because india never had credit card payments( at scale ) . they went straight from cash to digital payments.

India has a robust Debit card system instead of Credit cards.

Re: UPI: Anatomy of a Payment Transaction

#84

Post by thedelanyo »

drewfax wrote: post #62

Yes, UPI works. But it's a terrible system for privacy and autonomy. It has so many intermediaries, requires phone number and linked to person's identity. It should not be called a peer-to-peer payment system in anyway. It is controlled by the government rather than Visa or Mastercard. That's the only the difference.

Money after all is controlled by the government anyway.

Re: UPI: Anatomy of a Payment Transaction

#85

Post by khurs »

tecoholic wrote: post #34
crop_rotation wrote: post #28

Earlier quoted context omitted.

Just for my curiosity, why do you think "what NPCI is offering will end up negatively impacting the general population in the long run."

I would guess NPCI being a private body with transaction charges being borne by the Indian government is a net negative in the long run. It costs everyone. NEFT and RTGS on the other hand is RBI regulated with clear pricing and costs only those involved. The cost structure needs to change, but then, it won’t be possible. To pay 5 rupees for a chocolate with your phone and get even 0.5 added on top would make the cons…

https://en.wikipedia.org/wiki/National_Payments_Corporation_...

Founded in December 2008, the NPCI is a government organisation registered under Section 8 of the Companies Act 2013, established by the Reserve Bank of India and the Indian Banks' Association. The organisation is owned by a Government of India,[8] and has been promoted by the country's central bank, the Reserve Bank of India. The NPCI was incorporated in December 2008 and the Certificate of Commencement of Business was issued in April 2009. The authorised capital has been pegged at ₹3 billion (US$31 million) and paid-up capital is ₹1 billion (US$10 million).

Initially, there were ten promoter banks viz. State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citibank and HSBC. In 2016, the shareholding was diluted to include 13 additional public sector banks, 15 additional private sector banks, 1 additional foreign bank, 10 multi-state co-operative banks and 7 regional rural banks. The Board consists of Biswamohan Mahapatra as the Non Executive Chairman, Nominees from the Reserve Bank of India and Nominees from ten core promoter banks.[9] Dilip Asbe is the current managing director and chief executive officer of the NPCI after A. P. Hota, who retired from the post on 10 August 2017.

Re: UPI: Anatomy of a Payment Transaction

#86

Post by altmanaltman »

sometimes_all wrote: post #65
altmanaltman wrote: post #60

Earlier quoted context omitted.

It has everything to do with credit cards if you understand what the parent comment is saying. Credit card allowed people to use something else other than cash when internet banking/digital payments wasn't available and smartphones were not a thing. Their entire society adopted credit cards as a very normal way of payment even for everyday stuff since it offers convinence over cash and rewards. Yes India got credit c…

Well, yes, but you conflate that credit cards would've worked, had they been available/easy, in a place like India, which in many ways rejected and still sometimes rejects the kind of thinking which makes credit cards successful in places like the US, which is what the GP was saying. People up until one-two generations ago completely rejected the use case for credit cards for payment, since they just did not want to…

I'm not sure what you mean. You also need to look at the whole environment and other factors than just "People just didn't feel they wanted to use it". In 1961, India was extremely poor and it has been until the 90s. Credit cards at that time did not solve any problem, people had no use for them and the culture of using it never grew as it did in the US but UPI gained acceptance because the country was doing much better and it was easy to use. That's what we were discussing.

You seem to either not have an understanding of ground reality (if your father was using Diners Club in the 60s, he was in the elite). But the system "being" there vrs the environment of the system actually being useful are different things. People did not reject credit cards at that time due to idealogical reasons, they rejected it because there was no point for them.

By the time, we stepped up in commerce, digital payments like UPI were easily available. This is why most people say we skipped the credit card phase and went straight to digital payments. Nobody is saying India did not have credit cards but look at adoption rates and the economic reality of India in the 60s to 90s and you will see many factors that prevented this that are not realated to the technolgy or idealogy at all.

Re: UPI: Anatomy of a Payment Transaction

#87

Post by khurs »

colesantiago wrote: post #41

UPI is fantastic software and the pride of great software engineering from India. Excellent engineering. I only wish more countries would implement something like UPI in other countries and get rid of inferior and broken solutions like crypto.

Instant payment systems by country:

https://en.wikipedia.org/wiki/Instant_payment#Notable_instan...

Re: UPI: Anatomy of a Payment Transaction

#88

Post by OJFord »

sometimes_all wrote: post #52

The content is good, but the crore/billion toggle is fantastic. A great addition, I hope it catches on in India-specific websites. I just wish it had a tooltip because its purpose was not immediately clear (CR/BN is a bit cryptic).

Ooh that's what that is - I thought it looked like a language toggle, but I couldn't work out the languages or in what language the abbreviations were (like HI/EN), and obviously it didn't have that effect. That is a nice idea.

Re: UPI: Anatomy of a Payment Transaction

#89

Post by adjejmxbdjdn »

tecoholic wrote: post #77
vinay_ys wrote: post #68

Earlier quoted context omitted.

All payment rails in India are RBI regulated directly or indirectly. NPCI is a non-profit section 8 company which is basically owned by the major PSU and private banks of India. And NPCI operates not just UPI, it also operates NEFT, IMPS, AEPS (aadhaar based payments), NETC (fastag), NFS (ATM network), Rupay debit/credit card network and BBPS (billpay). Only RTGS is operated by RBI directly. Money serves its purpose…

Thanks for the additional info. But I want to clarify one thing - I didn’t say anything about cash being a better choice. Both the comments to my response are making it out to be a cash vs digital thing. I am not sure why. Next, NPCI is a PSU. So what? They are taking govt money to function aren’t they? The costs are borne by the banks which get allocations every budget to keep the system running. So whatever “profit…

You’ve literally stated that you are “not knowledgeable enough to debate if it’s a net negative or positive.” and then you’re wondering why someone who has a significant amount of knowledge about the system in question is finding it “hard to accept the shortcomings of the system and acknowledge the cost of running the system”.

The real question is that given that you don’t know anything about the system, why would you find it so hard to accept that maybe your claims are incorrect? Further, the other poster is not stating that there are no costs of running the system. They’re claiming, correctly, that the costs are far lower than alternative mechanisms.

This is not even hard to see. The cost of running NCPI is trivial compared to VISA/Mastercard’s network, not least because being a private company trying to maximize profits VISA/Mastercard overload their core network costs with the costs of running a massive concierge, gift card and loyalty points business, which is where their profits lie.

Re: UPI: Anatomy of a Payment Transaction

#90

Post by brabel »

elendilm wrote: post #17

I have the utmost respect to people who makes UPI work. Made even the old people in the nation completely go digital for payments - a feat unparalleled in the world.

I think it was the same with PIX in Brazil, and Swish in Sweden, and probably many more precedents.
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