Unified Payments Interface, popularly known as UPI, has revolutionized the way we make digital payments. It has made it easier for people to transfer funds from one bank account to another without the need for bank account details, IFSC codes, or even a mobile wallet.
But how did UPI come into existence? Who is the mastermind behind it? In this blog, we will explore how UPI started in India.
UPI's Origination Story:
In 2015, the National Payments Corporation of India (NPCI) launched the first version of UPI, which was developed in collaboration with the Reserve Bank of India (RBI) and major banks in the country. But the journey of UPI began much before that.
The idea of UPI was conceived in 2012 when a group of bankers and industry experts came together to discuss the need for a payment system that would allow people to make digital transactions without the need for a mobile wallet. This group was headed by Nandan Nilekani, who was the former CEO of Infosys and the chairman of the Unique Identification Authority of India (UIDAI), which developed Aadhaar, the largest biometric identification system in the world.
Nilekani was appointed by the Indian government to lead a committee that would develop a framework for digital payments in the country. The committee submitted its report, titled "Committee on Comprehensive Financial Services for Small Businesses and Low-Income Households," in December 2013. The report recommended the development of a digital payments infrastructure that would be accessible to all and would allow people to make transactions using their mobile phones.
The report also recommended the creation of a new organization that would oversee the development and implementation of this infrastructure. This organization would be called the National Payments Corporation of India (NPCI), and it would be responsible for developing and operating a range of payment systems, including UPI.
Nilekani played a key role in the formation of the NPCI, which was established in 2008. He served as the chairman of the NPCI from 2009 to 2013 and played a key role in shaping the organization's vision and strategy. Under his leadership, the NPCI launched a range of payment systems, including the National Electronic Funds Transfer (NEFT) and the Immediate Payment Service (IMPS).
However, Nilekani's biggest contribution to the world of digital payments came with the launch of UPI in 2015. UPI was developed as an open architecture platform that would allow banks to develop their own apps and services on top of it. This meant that customers could use a variety of apps to make transactions using UPI, without the need for a specific bank's app or a mobile wallet. (Here's a comprehensive overview of UPI’s technical stack)
Nilekani was instrumental in bringing together all the major banks in India to collaborate on the development of UPI. He also played a key role in convincing the RBI to support the initiative and create a regulatory framework for digital payments in the country.
Nandan Nilekani is one of India's most well-known entrepreneurs and technocrats. He was born in Bangalore in 1955 and graduated from the Indian Institute of Technology (IIT) in Bombay in 1978. After graduation, he co-founded Infosys, one of India's largest software companies, with six other co-founders.
Under Nilekani's leadership, Infosys became one of India's most successful and respected companies. He served as the CEO of Infosys from 2002 to 2007 and played a key role in transforming the company into a global technology powerhouse. In 2009, Nilekani left Infosys to join the Indian government as the chairman of the UIDAI, which developed Aadhaar, the world's largest biometric identification system.
As the chairman of UIDAI, Nilekani oversaw the development and implementation of Aadhaar, which has been instrumental in providing a unique identification number to every Indian citizen. Aadhaar has enabled the government to improve the efficiency of social welfare programs, reduce fraud and corruption, and increase financial inclusion in the country.
Nilekani's expertise in the field of technology and his commitment to social change have earned him numerous awards and accolades. In 2006, he was awarded the Padma Bhushan, one of India's highest civilian honors. In 2017, he was awarded the Lifetime Achievement Award by the Economic Times, one of India's leading business newspapers.
UPI Becoming the most popular digital payment system in India
The vision and leadership of Nandan Nilekani, along with the efforts of the NPCI, the RBI, and the major banks in India, have transformed how we make digital payments. Today, UPI is the most popular digital payment system in India, with over 200 million registered users and more than 2 billion transactions processed every month. Click here to know more on the current volumes and trends of UPI India.
UPI has enabled people to make digital transactions with ease, speed, and security, without the need for a mobile wallet or bank account details. It has also enabled small businesses and entrepreneurs to accept digital payments, thereby contributing to the growth of the digital economy in the country.