In India, the coalescing of payments around the National Payments Corporation of India (NPCI)'s payment network and standard called Unified Payments Interface (UPI) has been a gamechanger. Bank consumers can create virtual addresses that they can give to any individual or entity and use it for sending / receiving money. The recipient can be a customer of any bank, not necessarily theirs. As long as the bank is on the NPCI backbone (almost all banks are), the transaction is safe, secure and seamless. At the moment, there are no fees for using UPI and the transaction limit is Rs. 200,000 (approx. USD 2500), so a vast majority of small ticket purchases can be done electronically. The transaction volume statistics at NPCI is pretty impressive. https://www.npci.org.in/what-we-do/upi/product-statistics
The Economist recently discussed. To demonstrate the success of UPI, the mentioned that panhanders now routinely present an UPI barcode instead of a pan. I doubt that Apple Cash will have the same success.
If apple makes it fee-free and paperwork free even for small businesses, and they make an android compatible app, then it will be successful and will take over from banks and MasterCard/visa.
Otherwise it'll remain a tiny proportion of the overall payments industry.
I read about a lot of proprietary apps/services in this chat to allow easy and instantaneous transfers of money between parties. They probably work fine and most importantly filled a gap at the right time.
- A scheme that works based on standards: ISO PACS messages (easy for other banks to join)
- Actually transfer the funds from bank A to bank B (not sure if other schemes mentioned here basically work on a "we received an acknowledgement, we promise to send the actual money later via a real payment") in a 10 second period
- Does not depend on the commitment of a (small) group of private companies top keep existing, but instead depends on an obligation in EU law enforcing the national banks to force their member banks to implement it
The only thing that still sucks is that you send money to others based on their IBAN - which is fine but definitely not as intuitive as an e-mail address or phone number.
UPI's design is very good. It does all of the mentioned points along with ease of use.
1. You can discover the counterparty using their registered mobile phone number tied with their bank account. In B2B and P2P scenarios, the business or the individual already has the counterparty's phone number in most cases. So, this handles like 90% of the cases of simple discoverability. For use cases like sending money to friends/family, this is perfect.
2. The mapping of the virtual address to the bank account is maintained and managed by the banks (as part of the bank's UPI interface mandated by the standard) and shared with the NPCI's UPI backend using tokenization.
3. A user can create multiple virtual private addresses [VPAs] (eg: mybillpay@bigbank, subscriptions@bigbank etc.,). The user can then track their spends/receipts by VPA.
The ease of use is an order of magnitude higher compared to entering bank account information. Settlements are bank-to-bank and instantaneous (~2-3 secs) powered by the NPCI backbone.
India used to have a high use of Cash-on-delivery (COD) for e-commerce. This gave a good electronic equivalent for COD that also helped e-com operators.
> IBAN - which is fine but definitely not as intuitive as an e-mail address or phone number.
I see how that makes sense for most people, but I have so many emails and phone numbers and change them so frequently that I find it somewhat spooky. Providers can re-assign a phone number after some time, and when I transfer money using a phone number the app does not show me the name of the recipient before making the transfer (understandably, as that would be a terrible privacy leak), so I don't feel comfortable doing it...
At the same time, I am pretty sure that banks are loth to re-assign an account number, and if they do so, have processes in place that are adequate to the significance of that (as opposed to telco providers, who presumably did not intend for their phone numbers to serve as an identifier for money transfers...)
