UPI - The Data Behemoth

UPI – The Data Behemoth

UPI stands for Unified Payments Interface, which is a real-time payment system developed by the National Payments Corporation of India (NPCI) in 2016. It allows users to transfer money instantly between bank accounts using a mobile phone or a computer.

UPI is a highly secure and user-friendly platform that enables peer-to-peer (P2P) payments, as well as payments to merchants, bill payments, and other transactions. It is an interoperable platform, which means that users can make transactions between different bank accounts and different banks using a single mobile application.

Let us get to the Data equation – after all, that’s my day job and what keeps the business humming.

UPI is like a Banyan tree – It creates a whole ecosystem around it. See the linkages now:

RuPay – Government of India has launched RuPay a wholly indigenous Card system which reduces dependency outside sovereign borders and helps stimulate the Indian commercial ecosystem keeping costs down – ?The linkage between RuPay and UPI lies in their interoperability. RuPay cards can be linked to UPI IDs, which means that users can use their RuPay cards to make payments on the UPI platform. Similarly, UPI can be used to make payments on the RuPay network, allowing users to withdraw cash from ATMs and make payments at merchants that accept RuPay cards.

RuPay has seen a … hold your breath; 250X growth from 2012 to 2023. As we speak, the number of RuPay cards is a shade above a Billion with massive volumes of spatial, financial and demographic data being thrown up.

P2P Payment ecosystem – Many unicorns were created. A Unicorn a week is now the norm for India and many are now profitable. What is the linkage of UPI with P2P. UPI acts as the central nervous system for the P2P providers. This is testified by the vast ecosystem of 20+ players – few are listed below.

Google Pay, Paytm, PhonePe, ?BHIM (developed by the National Payments Corporation of India), Amazon Pay, Mobikwik, Freecharge, WhatsApp Pay, Truecaller Pay, Airtel Payments Bank, JioMoney, PayPal, CRED, Simpl, Ola Money, Yono SBI, ICICI Pockets, HDFC PayZapp, Axis Pay, KhaaliJeb

The digital penetration we have seen is massive. The P2p NETWORK is now crossing Rs. 12.9 Lakh Crores (which is a shade over € 156 Trillion in transactions).

Digital Payment Index – March 2018 was the launch date of DPI and baselined to a 100. This is calculated bi annually. The RBI-DPI (capturing data for March and September months) and consists of the following five parameters that measure the depth and penetration of digital payments across the country over various periods.

·??????Payment enablers

·??????Payment infrastructure – demand-side factors

·??????Payment infrastructure – supply-side factors

·??????Payment performance

·??????Consumer centricity

The DPI is now at 377 (5 months?ago) . It was 342 in March 2022 and growing steadily. … the DPI has quadrupled from its launch five years ago.

Cardless Withdrawals – Next level banking using UPI allows customers to withdraw cash without having a physical card. Here is how the process typically works:

1.??????The user opens their UPI-enabled mobile banking app and selects the option for cardless cash withdrawal.

2.??????The user enters the amount they wish to withdraw and selects the bank account from which they want to make the withdrawal.

3.??????The app generates a one-time-use PIN (OTP) or a QR code, which the user needs to use to withdraw cash from an ATM.

4.??????The user goes to an ATM that supports cardless cash withdrawals and selects the option for cardless cash withdrawal.

5.??????The user enters the OTP or scans the QR code at the ATM and enters the withdrawal amount.

6.??????The ATM dispenses the cash and the transaction is complete.

International Network – UPI for Singapore is a done deal. While it is a great cause for celebration, we expect UAE, Indonesia and Mauritius to join this journey soon.

What does this mean for the country – What we are witnessing (and I will write an article separately on the power of Aadhar + 4G + Upcoming 5G + UPI) is a data explosion of mammoth proportions. The following five conclusions are reasonable from what we have seen in India

·??????Lower foreign exchange costs, fees and faster transfers between countries with large Indian Diaspora

·??????Retention of money in Rs instead of $ thereby strengthening the local currency and fortifying it against shocks

·??????As volumes of Rupee trading grow, its inevitable that india will become the Sixth currency in the IMF’s SDR – The impact of this is that countries will have to maintain reserves in SDR (indirectly INR as well)

And the data grows..:

Transaction data: This includes information on the number and value of transactions processed through the UPI platform, as well as details of the sender and receiver of the transactions, the time and date of the transaction, and any associated fees or charges.

User data: This includes information on the users of the UPI platform, such as their personal details, bank account information, and transaction history. This data is typically stored securely by the banks or payment service providers that offer UPI services.

Device data: This includes information on the devices used to access the UPI platform, such as the type of device, the operating system, and the version of the app or software used to initiate transactions.

Location data: This includes information on the location of the user and the device at the time of the transaction, which can be used to help detect fraudulent transactions or identify patterns of usage.

Performance data: This includes information on the performance of the UPI platform, such as the speed of transaction processing, the reliability of the system, and any issues or errors that may arise during transactions.

Merchant data: This includes information on the merchants that accept UPI payments, such as their business details, transaction history, and sales data.

These are just a few examples of the types of invaluable data generated by the UPI ecosystem. The collection and analysis of this data can provide actionable insights into the behavior, demographics and preferences of users, as well as trends and patterns in digital payments in India. It is important to note that this data is subject to strict privacy and security regulations to protect the personal information of users. Data providers are in for a exciting decade ahead mining, monitoring and drawing conclusions from this rich reservoir of data which will further fuel the engine of growth.

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