I’ve been using UPI since its very early days when it used to fail quite often. UPI is still one of the best things to happen in the financial scene in India. However, these days, personally, I’m trying to reduce it to either known people, or established institutions. I wish there is another layer of tokenization when one pays via UPI, like how Apple Pay does. I wish that the transaction is obfuscated and the phone numbers and/or UPI ID are hidden.
You pay for a nice hot cup of ₹10 Chai on the streets but then you got a phone call later on - naively to upsell something, or the next step up, trying to scam you. Unlike me, my wife continues to pick up every incoming phone calls. We have had enough calls from people whom she paid via UPI trying to sell or this/that and what not.
There is a scam going on in India. Random females, who are either naked or scantily clothed, will call up on WhatsApp Video. If you pick up the call, say while in the bathroom and not fully clothed, they will take screenshots and threaten you that they will make that picture “viral” to extort money. I won't be surprised if there is an under-belly of phone numbers and other data being sold that were collected via UPI payment transactions.
Cash is still OK at the tea-stalls, the random shop, etc. Well, when I just wanted to have a simple Bombay’s cutting-chai but the chai-guy wants my phone number, and everything else -- I'm not comfortable with that.
>There is a scam going on in India. Random females, who are either naked or scantily clothed, will call up on WhatsApp Video. If you pick up the call, say while in the bathroom and not fully clothed, they will take screenshots and threaten you that they will make that picture “viral” to extort money.
This is baffling. First, how much % of the day do you spend naked? 1-2%? So the success rate of any given call is going to be 1-2% at most, given that otherwise theres nothing scandalous to post. Second, do people just instinctively accept video calls, while they're naked? That seems very unlikely to me.
The receiver don't have to be naked. So, here is the story that got me to look into this a bit to learn what was happening. Father-in-law don't keep all the phone numbers updated, so, he picks up all calls -- mostly video calls from his kids and grandkids.
One day, he picked up a WhatsApp Video, where the woman on the other end was pretty much naked. Father-in-law was in the couch and gave the phone to my wife, asking who is on the other end. After some verbal exchanges to stop calling us; a barrage of WhatsApp message began -- screenshots of a semi naked women and father-in-law on a video chat.
I ignored the first time wife complained. By the 3rd, or so message, I called up a friend to give them a casual call and let them know who he was. Yeah! This whole scamming to get people's picture in phone screenshots getting "viral" seems to be a common scam in India.
If all it takes is a screenshot, why not just photoshop it? Why do you need to call at all? I know there are a lot of scam calls trying to get payment credentials or get people to make payments but this MO sounds quite implausible.
The screenshot is likely the precursor the the video they record since the call got established. For most non-tech, and generations prior to us, would be startled, and likely to act in a haste to avoid further embarrassment. Let's say they have a success rate of less than 10% (1 in 10 calls), it is worth their time sitting in cabin somewhere in a town in India earning ₹25,000 a month working for an "Support Call Center" helping them setup this scam patterns.
You wanna try a sure-shot scam/Spam game right now?
1. Register a domain in India or via an Indian registrar, I will guarantee you that in the next few days to weeks, you will get all the needed spam in your inbox associated with that domain registration. If you have given your phone number, then they will call up there too.
2. Register a company. Baam! Phone calls, emails, and the very famous Book Parcel scam via the post office to the registered address, and what not.
Have fun. India is definitely not for beginners. /wink
I think that works everywhere, not just in India. I'm getting spam to my Estonian company's and my Russian sole proprietorship's email addresses at least every week.
Norway too. When you register a sole proprietorship in your name in Norway, you will soon get multiple other Norwegian companies contacting you.
Some of them purport to help you “start your business”. They will charge you money and provide about zero value. They are not trying to help anyone at all, they are just looking to exploit inexperienced people.
And the worst ones will use wording to make themselves seem like this is another required step in order to complete the creation of your company. All the while being very careful so that although the wording tricks other people they can still snake their way out of trouble by pointing to some part or the message they sent that somehow clears them of any way to get them fined or otherwise punished for actual fraud.
This was already a problem years ago when I registered my own sole proprietorship. I am sure that today with the ease of generating convincing garbage using LLMs the problem is probably even greater.
Same in the US. Register a domain, and a few months before it expires you will get an official-looking invoice requesting payment to renew it. In small print somewhere it will disclose that it is a "solicition for services" and not an invoice. The tipoff should be that the renewal is about 10x the price of the original registration but I guess enough people are taken in that it's worth doing.
Since they send these notices by mail, there will be a disclosure in it somewhere, otherwise it would be mail fraud which is a rather serious federal crime.
Because the person making the call does have proof that the victim actually picked up the call. If they needed to they could show up in person and show the blackmailing material to someone else (wife, boss), and show them on their screen that the victim picked up the call, and prove it. That's surely worth something.
Showing up in person to blackmail is a sureshot way to get beaten up by victim and their supporters in India, 99% of the times. It is like police-on-the-way pay up right now scams happening in USA. Scammer takes advantage of fear of insult of police showing up & in handcuffs. If the police actually show up, the fear is gone, it can't be undone.
The naked video chat scam, when it was new, was mostly banking on victim wanting to keep it secret or wanting to go away. Once of somebody shows up, that shame is gone; and beating ensues.
Yes, Photoshop happens, simple clothed people face gets plastered of fake screenshots.
There are plenty of other scams going on. Like international caller will call and say your son/daughter/relative is on trouble (hospital, police, accident) amd pay right now to get him saved from that said trouble.
Or caller will say that I will send you X amount of money to safe keep, but pay x/100 now to get X across.
I would guess 1) it is easier to screenshot than to find a picture of someone and then photoshop it in 2) scams are almost always about fear and urgency -- if you tell them you are going to photoshop it and let them think about it for a while, your chances of getting paid are much smaller than if you go 'gotcha now pay me or I hit send'
> So the success rate of any given call is going to be 1-2% at most, given that otherwise theres nothing scandalous to post
OP didn't mention it explicitly, however, chatting with a scantily clad person on the other end can be used as blackmail material too no matter what state of dress you are in.
if i'm clothed 98% of the day, it was a bad day. i wear as little as possible at all times. takes all kinds, however, but i'm sitting in mccarthy, alaska rn, in a robe i brought from my home in anchorage, so i'd only have to put on pants when necessary.
I withheld using UPI through the pandemic and a long while after that because of the no. of fraud cases I kept reading about and my reservations about UPI’s origins. But gave in and got in after moving to a new city and getting stuck in multiple places for the want of 5/10 rupees in change that somehow nobody seemed to had.
I mostly just use it my grocery store and vegetable store or in those no-change situations. Yet, in the last week alone I have blocked at least 3 WhatsApp chats from unknown numbers about offers, business deals, one even very friendly female hi.
No, a custom UPI ID won’t save you from your phone number being shared with merchants. [1] UPI payments also leak the person’s full legal name on transactions. Whether this is useful in merchant payments (not personal payments to known people) is highly doubtful.
I wanted even things like my bank name or UPI app itself to be private. So I discovered that we can creat a 9 digit UPI number/ID and use that. But doesn’t seem to help. Support for that seems to be non-existent. I have tried entering it places that ask for UPI id like online portals, but no. Only the @ format seems to be supported everywhere
The UPI protocol lets the acquirer lookup this to get additional information, and this is being used by several acquirers, notably Smartbuy@HDFC to provide phone numbers to merchants.
I think most data selling happens via branch employees / telecom operators instead of "at the top"
Banks / UPI vendors have to comply with very strict data regulations and the confirmation of a "data leak" is enough to attract heavy penalties from the NPCI and RBI. Most banks and UPI service providers will never risk it, specially post the DEPA guidelines which have recently been adopted.
Both these tweets can be addressed by adopting a UPI enabled wallet.
Using Cheq, you can keep your bank account plus mobile number secret. Everyday small value transactions can also be consolidated separately from your main bank account.
I don't think anyone is selling data in the UPI ecosystem but if they are, that's a very short-sighted strategy to make money for sure.
Yes, upi ID generated by wallet app (I use PhonePe) doesn't tell others anything about my bank. It simply says money sent from davchana@ybl (YBL is Yes Bank, but my connected accounts to PhonePe are not Yes Bank). All PhonePe accounts are ybl irrespective of your connected banks.
I'm not sure if it's possible with UPI but I know in Kenya many people will get a second, cheaper phone to use for m-pesa (mobile money), I think partially so the battery doesn't die on it but it could also reduce the types of calls you're talking about, or at least make it obvious that someone is calling your mobile money number.
Is that possible with UPI? Or even a dual sim? I'm not sure if the account is tied to the person or the number.
I think the issue is that Bank Accounts also need phone numbers linked to them and it seemed like only one phone number could be tied to an account. Having a secondary phone number used to combat spam also being the sole number tied to a Bank account could be bad. I could be wrong about the single phone number for an account, but that was what I experienced recently.
Account is tied to person's account number. Apps usually need current crop of phones, 5-7 years old phones not supported by app store are also not supported by apps.
Using ICICI bank iMobile you can create a random UPI id totally unrelated to your phone number I agree with the problems you mention, and in general there is an increasing trend of taking phone numbers of customers in India, e.g. once at a Nike store, I was told the purchase couldn't be complete without the phone number.
I refuse to give phone numbers and usually the cashier will enter their own fake phone number to let the system proceed further. Some shops like decathlon tried to force us to install their app, create an account and then scan and pay through that – at the cashier counter. I just left the entire shopping cart there and walked out without purchasing. Such crazy things do happen but those companies will learn the lesson quickly as Indians are quite savvy about these things.
I do the same but in this case I had already made the payment and they refused to give me an invoice without a contact number, and I didn't have any interest in a confrontation. If I had not made a payment I would have simply walked out.
Next time, tell them that the Union Minister of State for Electronics and IT has said that people shouldn’t give their phone numbers at retailers if there’s no justifiable reason. [1]
If they refuse to give an invoice, tell them you’ll report them for GST evasion. [2]
Anyone doing video calls sorta deserves it, especially if they are accepting video calls from people they don't know.
EDIT: we kind of solved this problem in Brazil (PIX is similar do UPI, predates it in fact), as the user can opt to user other identifiers, or even generate a random GUID-like identifier.
I’ll avoid repeating my previous comment [1], which has details on this. Unlike the mistaken belief of several people on this post, UPI does share the phone number even if a person uses an alphanumeric UPI ID instead of the initial or common phonenumber@provider address.
Paying via QR code is irrelevant, the receiver will see the UPI id you paid via, and 99.9% UPI ids are phone@<some_alias>. The QR code just is a shortcut to typing the UPI id.
1. If you are from one of G20 countries (for now, will expand to other countries), you can get a prepaid UPI digital wallet at the airport where you land. Just go to the money exchange counters and enquire about this. Airport information desk should help you as well. You don't need an India phone number or India bank account. You can load money into this prepaid wallet via your foreign account or credit card etc. You can use your passport as document for KYC purposes. This is most convenient for short visits. The UPI app issued will be by some forex company. When you leave India, whatever Rupee balance in the app will be refunded to you at the airport. The UPI apps that are most popular with Indians (GPay, PhonePe, PayTM) won't work for this.
2. If you are not from G20 or you are going to be in India for longer than a week, you are likely to get a local phone number. You can get a local prepaid phone number sim at the airport. Then, you can open a bank account in India, tied to that phone number. This account type is called NRO Rupee account – Non Resident Ordinary account. This entire process of opening an NRO account can be done at a bank branch physically or online via your mobile phone. Once you have that bank account, you can use any UPI app like any Indian does.
> Just go to the money exchange counters and enquire about this. Airport information desk should help you as well.
> You can get a local prepaid phone number sim at the airport.
Worth noting, do all this before you leave the airport. Assuming you land in Delhi, once you leave the airport there's no way to get back in unless you have flight information to show
This turned into a pretty big problem for me on my first trip to India once I exited the airport with no way to make phone calls, no data, no sense of where anything was, and no rupees (I hadn't exchanged cash yet)
Riiight.. there’s a problem with money exchange at the airport so the solution is to completely write off an entire subcontinent that’s the home of one of the oldest, richest human cultures.
If it’s a massive burden to do something as simple as pay for goods and services then why not? There is a whole world out there that doesn’t suffer from this problem.
1) This is never explained to visitors in way that'd get their attention - for example, getting a paper from immigration explaining that's available. Too complicated for now. Maybe once this is available outside the airport it's more viable. Strongly recommend visitors to just take out cash, and carry the amount they need per day + 50% on them. Personally I got by living in India for several years primarily using my American Express card which was accepted at more places than I expected.
2) I wouldn't advise visiting foreigners to get a sim as it requires passing your passport scans to untrustworthy low-level staff at the cell companies. It worries me how they take the passport to a backroom to scan it. I worry they're selling/distributing copies. I realize hotel staff also scan passports but they have reputations to protect and are less likely to. Google Fi/T-mobile roaming or an e-sim via Airolo are much more appropriate and wise choices for short term travelers. If you know somebody in India however, asking for a SIM is totally fine. You can pay to add funds via an international service like Xoom or an American Express card in the Airtel app (which worked for me occasionally)
Protip about American Express cards in India, and the reason I mention it several times. I lost mine last time I was visiting and they sent a new one to my hotel in under 48 hours.
1) is somewhat impractical, because it’s easy to miss the airport desk which does this, and if you miss the opportunity it’s not easy to go back there (Indian airports don’t really allow you back in if you’ve exited)
2) opening an account isn’t practical for tourists, but of course if you’re living in India for even a short while, it’s worth it.
3) Allegedly UPI will work for NRIs / OCIs with foreign phone numbers. In reality most banks haven’t implemented it yet.
tl;dr - “onboarding” onto UPI for short-term visitors is mired in burdensome bureaucracy, and this isn’t a technical issue with UPI, it’s a result of conscious choices by Indian regulators.
The real win would be if you could load up a UPI wallet like you’d do with PayPal. Perhaps initially restricted to people with a valid visa. But regulators haven’t figured that out yet.
I used the Cheq app to make UPI payments via smartphone / QR code, during a holiday in India in July. The app listed locations for completing the Know Your Customer (KYC) process - I did this at Transcorp in Bengaluru.
It was worth the effort - it is far more convenient than cash in most cases. Most vendors kept little change, and even restaurants were not keen on receiving a 500R note for a 200R meal. Similarly for museums, art galleries, historic buildings. Auto-rickshaw drivers were happy with cash, and had a reasonable amount of change. I did find a couple of vendors who weren't registered as merchants for UPI, and I could only transfer to merchants, not other users.
For travellers I'd suggest setting up UPI beforehand if possible; as mentioned you can do it as you fly in (Thomas Cook offers this service in the airport), but the KYC might take a while.
(Side-tracking from payments to SIMs : )
Several historic buildings had an online-only ticket process with a QR code displayed outside. The user experience of the websites was variable (navigating the forms and input widgets on a phone while standing in the street could be trying), and they required a lot of information, eg. Passport number and sometimes home address, usually including authentication via one time password sent to mobile phone number and possibly they only work for Indian SIMs. Those sites accepted credit card payment, including international.
I couldn't count the number of times I gave my phone number, for all sorts of purposes, e.g. when checking in my phone at a temple, I was photographed and gave my number - simple id and method for finding the phone among all the others (when I realised that I switched the phone back on). And for all of these a local phone number is required, so pick up a local SIM at the airport or in the city. I did both, and I think the airport process was quicker. They do require full id for SIMs, including a local address, e.g. a hotel. A 28-day SIM cost only 299 rupees so I got a second one for increased coverage and capacity, because the networks are over-subscribed. (That's less than the daily rate at home). A dual-SIM phone makes that easy, and I could also run with one local SIM and my home SIM to receive SMSs. I was able to download maps and apps while travelling on buses and trains, and use tracking apps - which helped with knowing when a bus was approaching my stop.
> We are the first ones to focus exclusively on serving foreigners and NRIs in India and have issued the most number of international wallets till date.
Tried the app on two different phones with two different USA numbers. Never received the OTP on either. What if this happens when executing a transaction that requires OTP?
UPI transactions thankfully don't need an OTP for verification.
As long as you have internet, your payments should work fine
You'll just have to enter the transaction PIN (which you decide while creating the account).
Sim binding generally fails because the individual is unable to send an sms due to recharge/network issues. Can you raise a ticket with the support team?
Someone will quickly get in touch and help you onboard.
> 1) is somewhat impractical, because it’s easy to miss the airport desk which does this, and if you miss the opportunity it’s not easy to go back there (Indian airports don’t really allow you back in if you’ve exited)
These money exchange counters are before airport security and accessible without "entering" the airport.
Those (before airport security) don’t perform UPI onboarding for foreign tourists. The usually-solitary shop/desk that does this is present in select airports for international arrivals (not departures) and needs to be used before you leave the secure area. And oh, good luck finding it staffed if your flight arrives outside business hours.
Your meta-point though is “oh there’s a workaround” or “if you go through hoops it’s doable”.
My meta-point is, the whole “do it at specific shops in the airport” is problematic and needlessly limiting.
Why an airport? Why’s it special? Could it be more convenient?
Asking these questions of digital systems (any digital system) is what HN is about. Not defending needless limitations.
hey, I'm just trying to be helpful for visiting foreigners. I don't have any need to defend UPI on HN and moreover UPI needs no defending, its stats speak for itself.
Except the ‘helpful’ steps you mentioned don’t really work. (Another commenter linked to some up and coming apps which are far more promising[1], I’d definitely urge interested folk to look into those.)
> moreover UPI needs no defending, its stats speak for itself.
The law of large numbers applies to UPI like it does to almost everything in India: you’ll get huge numbers which look good on slides.
In reality, UPI is a bit above 10% of India’s cash transaction volume, so yeah, the reality of “UPI is ubiquitous” isn’t quite there yet.
And “UPI needs no defending” is the exact uncritical thinking I expect when there’s any forum discussion of UPI. The thread started with people saying UPI doesn’t work for tourists & short term visitors, which I believe is valid criticism.
There are many other criticisms of UPI, including and especially the governance around it. (On a more optimistic note, all of this is fixable.) But that’s for you to figure out if you’re interested!
What's your basis for saying it doesn't work? Have you actually tried to get a prepaid wallet at the airport counter and it didn't work for you?
Don't make unnecessary personal attacks by saying there's no critical thinking. If there's a specific factual thing that's incorrect in what I wrote above, feel free to point it out with evidence. Don't make unnecessary tall and broad claims about others who you know nothing about.
Btw, I didn't say UPI doesn't need improving. I actually worked on different parts of UPI stack to do exactly that. And if you take the time to look at the number of feature launches that have happened on UPI you will realize how much work to improve it is actually happening every month. Also, if you really leave your biases aside and look at it critically, you might realize that the scale of UPI wasn't a given just because it is India. It takes effort make anything get to that scale and keep growing.
> What's your basis for saying it doesn't work? Have you actually tried to get a prepaid wallet at the airport counter and it didn't work for you?
Expecting incoming international passengers to queue up at a solitary shop (and hope that it’s staffed) in an airport arrivals zone, before they exit the airport secure area, isn’t helpful or convenient or “digital”. Because passengers after long flights often just want to exit the airport and get to a comfortable bed. Or even otherwise are prone to making mistakes.
Also, I’ve actually seen the kiosks in two airports unmanned and lying empty (to be fair, early morning arrivals). So even a motivated passenger is not guaranteed to receive service if they arrive at an odd time. So when I say your advice is not helpful, yes, it’s with personal experience.
The apps (one of them funded by YC) are a great alternative to this “line up at a particular spot” madness, and hopefully they’ll improve and become more streamlined over time.
PS. If you say “xx doesn’t need defending its stats speak for itself” you will sound uncritical whether you intend to or not. It’s a classic “shut down debate” line. Perhaps appropriate at the Arnab Goswami school of debate, but out of place elsewhere.
If you use it, are called out, and then see it as a personal attack, that’s unfortunate — certainly not my intention to attack you “personally”, but you’ll need to think about your words too.
Hey guy, I can tell you that a friend recently visited India and was told by the staff at the counter in the airport that the prepaid UPI wallet barely works and to not use it. Also since he landed in the night (like most flights from the West will), the counter was officially "closed" for this purpose and he had to haggle with the people at the counter to even get as far as he did.
UPI is a great system for Indians, but it is still hostile to anybody visiting without an Indian identity document. India's reliance on SMS for OTP codes is also super bad imo. There is no need to be defensive about UPI. It's good, but it can always be better.
India’s obsession with SMS codes and UPI in particular sucks as a tourist/visiting businessperson. Nothing works with a non-Indian number. You can’t get an Indian SIM without an Aadhar number outside an airport and every time I’ve flown in late at night those airport kiosks have been unstaffed.
The whole system is built around phone numbers. It puts the end of the chain of trust in the hands of the corner store vendor not accepting a fake photocopy of an ID to swap SIMs. It’s ko different than when South Korea mandated ActiveX for browser security for banks.
Let’s not even get started on the whole Unique Identification Authority (UIDAI) joke. India doesn’t have Apple Pay because it’s illegal to have device-local biometrics - you must store it and verify it with the government.
UPI is also an extremely shortsighted system throwing away any semblance of privacy for the population. The whole thing doesn’t have fees partly because sharing every bit of transaction data with 7+ parties in every transaction is how it is funded.
> This entire process of opening an NRO account can be done at a bank branch physically or online via your mobile phone.
Online method is not possible since banks and other providers insist on providing Aadhaar number and completing OTP authentication for that mode. Aadhaar is a number given for residents, i.e., anyone who has legally resides in the country for more than 182 days. So a foreigner landing in the country isn’t going to be eligible for it until six months have passed.
Having been in a situation where I've asked for one of these accounts, the bank asks for FRRO registration paperwork. If you've ever been to a FRRO, you know they won't actually grant those :)
As a foreigner who's lived in India for several years, what I'd really prefer is the ability to make payment using the instruments I have and not having to do a whole "KYC" process that no other country would ask me to. Context - within my home USA, I can open bank and credit cards accounts without ever even showing an ID. Having to ask very local shops to scan your passport/visa is an extremely uncomfortable request for people from abroad who have been told to protect that document from identity thieves their whole life. Nobody wants to give their address or phone number to a shopkeeper. I wish you guys all the best, but ultimately what India needs is more of those awesome Pine terminals which reliably take foreign cards and Apple Pay support. Then they get the lost card and chargeback protection they get everywhere else. So many foreigners are willing to come and spend money at small shops, why not better enable them to with the tools they have?
The pine terminals and credit card acceptance cost the merchants hefty fees.
Which many of the small businesses prefer not to pay, specially given the infrequency of card purchases.
You can always stick to cash and card as your preferred mode of payments in India.
Having a UPI wallet can be a convenient backup for travellers though. You won't have to run around finding an ATM in case you get stuck.
And the verification process might seem "difficult" but its one-time and less painful than visiting a doctor.
Given the applicable forex regulations, I guess that's the best we're allowed to enable right now.
When I moved to Sweden I had the same issues because of a dependency on Swish and BankID (and personal ID numbers). It can be a real pain for things when you’re staying a little longer than a weekend and want to go to a gym for example. I went to one cafe where I literally had no way to pay as a foreigner
A normal European debit card works everywhere. Cash-only establishments are uncommon. With that said I don't know how complicated the procedure is for a non-EU citizen to get a bank account (and with that a normal debit card) after moving to Sweden and having obtained a permit for residency. For EU citizens it's not a hassle.
I lived in Sweden for 6 months in 2018 and didn’t have any such problems.
My Dutch Maestro debit card worked in all shops and cafés I visited, and online I was usually able to use a MasterCard.
Personnummer was really only required for things like phone plans and store loyalty cards, which you don’t really need. I just used EU roaming on my Dutch SIM, but if you’re non-EU I believe you can get PAYG/prepaid SIMs without needing a personnummer.
I don't know about Sweden in particular, but things have moved very quickly in this space, especially since Covid.
It's very common that things that used to be cash only (food trucks, car parks, ...) have moved to $local_system since then.
I think Swedish banks issue MasterCard or Visa as their standard debit cards, so it seems to me that it should work (although I didn’t have reason to try it when I was there). See e.g.:
There's a big push on Swish which is a mobile banking app and only available to people with BankID - there are smaller places that are Swish-only which means you cannot pay with a card or cash but a Swedish-specific app. I am now with Handelsbanken so this issue is solved but when I first visited it was an issue!
But regardless of those more niche issues, did you try joining a Gym before getting a Swedish card/personnummer?
Handelsbanken -> issues Maestro, scroll down a bit
I was there a few year ago with both Mastercard and Visa in my pocket and the success rate was 60-70% for that combination (i.e. some one third of the places would not accept either). But steadily improving.
I was back there 2 months ago. That facility was not available and I was from one of the 20 countries that are allowed (you can specify a US/Can phone number). I downloaded PhonePe and PayTm. You at least needed a NRE (rupee) account. What seemed to work always was tap. But I think the tap amount was always < us 200.
If you have guidance on how to setup Google Pay/other with UPI it would be appreciated. I even tried updating my Google Pay software to get the Indian version in the hope it would work.
UPI is great and I hope it becomes worldwide. I think they started in France recently. If you are an Indian citizen/OCI holder encourage your foreign banks to get involved. I do not have much hope for Canadian oligopoly banks but if a bank in the US got it I would move some of my money there.
American here. I visited India in June of 2023. I tried using various apps to access UPI, but I was unable to figure it out. I couldn't find a way to connect a USA account (bank, credit card, PayPal, etc.) as a payment source. Hopefully it will be easier soon.
I have friends who are Indians living outside. They don’t have a UPI account and find it difficult to get around when they visit India for a few weeks. The simplest solution would be an app that can use a credit card to load to a UPI compatible wallet. I’m guessing the market is not big enough for such a use case or the regulations are too onerous.
That is why I hate seeing people equating this to 'development' or some other metric of improvement. This excludes not just you, but people who do not have a phone, do not know how to use one, cannot use one, have access to just cash etc.
In contrast, in Japan, they may have NFC payments by card/phone, online payments, but every single bus/train/cab/boat accepts cash as the lowest common denominator. Forget payments, all public offices still support paper + post for all procedures I've had to do, with the option of doing things with a phone or a PC. In India, however, for several things I've had to do, they would rip out the old system and replace it with a online portal with dubious implementation, and often disregarding laws (for example using UID number as legal identity proof, while it shouldn't have been, by law).
Can’t wait to hand over my passport and drivers license to some random person after security wearing a uniform and holding an iPad after I get off an 8 hour red-eye.
An international driver license is not an id. It can be used to show to local law enforcement what vehicles you are allowed to drive. To use it you must have the original driver license with you too
This KYC stuff required to get a sim/temp UPI makes me very happy an address isn't put into US passports. Who else is going to get that address if there was one there?
Lots of countries around the world have an ID card which is the default ID mechanism and is often mandatory to have (compared to say a driver's license, which many simply don't have because they never drive). The US doesn't widely have that, altough there are some slow efforts to that effect AFAIK.
You'd be surprised how well a US Passport Card is accepted as an ID around India. Most people are just looking for something official in a card-sized format. There's no address, no real passport number on it. It's a more harmless document to identify yourself abroad.
The physical verification process is required to respect the AML guidelines established by the RBI. The process itself takes less than 5 minutes but must be done once the foreigner lands in India.
In Blr/Mumbai/Delhi, our team can arrange for home verifications as well.
This is very valid feedback - foreigners do not want to deal with this nonsense KYC stuff to make payments. No assurance is ever given that the passport details will be kept safe and not sold off to people doing identity theft stuff
"the rest of the planet" doesnt accept visa/Mastercard just anywhere and certainly not amex.
In e.g. The Netherlands, mostly cashless society now, creditcards are hardly ever used by locals and so many POS won't have the infra to accept CC payments.
The world is not the US and the US isn't the world.
> the rest of the planet" doesnt accept visa/Mastercard just anywhere
most of the developed world does. even Eastern Europe have transformed themselves into a NFC bonanza.
> The Netherlands
the netherlands is the wrong example. it has always been an outlier when it comes to card payments. case in point: you can't even make a Visa/Mastercard payment in an AH supermarket, you need a Maestro card.
> The world is not the US and the US isn't the world.
i have travelled quite a bit. most the of the developed world (except for the Netherlands of course) has full support for Visa/Mastercard NFC. and Amex support is more and more spread (e.g. i have seen more and more Stripe in Greece lately). the world is moving on from the idea you have of it.
Visa/Mastercard aren’t as ubiquitous as people imagine, despite Visa/Mastercard trying to acquire their way to global market dominance.
The are many developed and developing countries that operate their own card networks, peer-to-peer payment technologies, and generally cheaper faster alternatives to Mastercard/Visa, with many merchants preferring them to their U.S. counterparts.
Visa/Mastercard may have dominance in the English speaking west, and many tourists location for the English speaking west, but assuming Visa/Mastercard is some gold standard the world should aspire to is very naïve. In reality alternatives like UPI and other peer-to-peer systems are more likely to be the payment systems of the future. Continued Mastercard/Visa dominance in its current form only really makes sense in countries with outdated and inadequate banking infrastructure, like the U.S.
> In reality alternatives like UPI and other peer-to-peer systems are more likely to be the payment systems of the future.
i find that very hard to believe as the user interaction for qr codes is a step backwards from using an nfc with a phone’s wallet. and once you use the nfc solution it’s very hard to switch back to a system that is less friendly.
of course, if you take the QR codes out of the equation and replace with NFC then i see no issues.
> Continued Mastercard/Visa dominance in its current form only really makes sense in countries with outdated and inadequate banking infrastructure, like the U.S.
you are wrong. if anything the system is getting more widely used. europe for example has very advanced banking infra and is all in on nfc, with mastercard/visa/amex widely accepted, and the system is being adopted everywhere.
> of course, if you take the QR codes out of the equation and replace with NFC then i see no issues.
There’s no reason p2p payments can’t operate over NFC. It’s just a short distance communication technology, it’s little more than an implementation detail in a payment network, and not significant to fundamental operation or economics of a payment network.
The fact Mastercard/Visa have a monopoly on NFC payments on phones is a big reason why the EU is investigating ApplePay and Apple NFC API restrictions.
> you are wrong. if anything the system is getting more widely used. europe for example has very advanced banking infra and is all in on nfc
I don’t think you appreciate the timeline here. Contactless payments have existed in Europe for over a decade, it basically at peak adoption already. Alternative P2P payments and technology like OpenBanking is only just getting started, and Mastercard/Visa are already worried, they’ve already made big acquisitions in Open Banking tech and alternative payment networks to ensure they don’t get cut out of the profits long term.
Ultimately payment technologies are chosen by merchants, not customers. If alternatives offer cheaper payments, and more importantly, faster merchant settlement, then merchants are going to start exploring those options. If companies like Apple are forced to open up their NFC stacks, and let others build alternative wallet and payment networks on them, then Mastercard/Visa current technical advantage will disappear very quickly.
That very advanced banking infra you speak off will forms the backbone of alternative payment technologies, why would anyone want to pay a middleman for a service their bank can provide directly, and provide much cheaper?
There’s no reason why alternatives won’t achieve the same ubiquity in the future. The EU has already built the common infrastructure that makes inter-county bank transfers instant and seamless. Honestly only Americans seem to struggle with the idea that companies like Visa/Mastercard/Paypal/Venmo are just symptoms of a dysfunctional banking system, not some incredibly new and innovative way to move money.
I paid almost eveywhere in Amsterdam with my Indian Visa card and it worked quite well.
Even the GBV Transport network lets you use NFC cards directly, without having to buy a separate card or ticket. You get a charge 6 days later after they tally up your trips.
I like UPI, but paying with NFC Cards is so much simpler, easier, and faster.
absolutely ridiculous that the class-based "developed world" label is still around, as if most parts of Asia aren't at the same developmental and infrastructural level as America. India is up there :)
Germany is another outlier. Mainly big chains will accept amex, and small places might not accept credit cards in general, though that has been getting better thanks to SumUp.
> "the rest of the planet" doesnt accept visa/Mastercard just anywhere
India does have the infrastructure and accepts credit cards but it's not available everywhere and UPI is more widespread in India. It can be found in street side sellers to massive retail stores. While the street side sellers won't have the methods to accept credit cards, massive stores probably will and there are always ATMs so cash is a thing. For travel we have Uber, and Uber accepts credit cards. so, You don't need UPI but it's a great convenience to have. On the other hand, Not having Internet access after you get out of the airport is definitely a problem.
They accept credit cards in most well to do stores. However street side shops probably do not. Most business avoid it due to the fee. UPI has them hooked with no-fee right now but fees are expected in the future. But right now, they have a no-fee option which is better than mc/visa/amex.
Amex acceptance in India is really good. Hotels, malls, Ubers, restaurants all take it without issue. I mean you can't buy food from local stalls, but as a foreigner visiting it's better to stick with branded restaurants to avoid food sickness (and if you're going someday, pack Imodium, best thing to get back on your feet after just a day)
I couldn't pay for lunch at my friend's office. They only accepted UPI as payment. It would have been nice to be able to pay for tuk-tuks and car taxis without using cash, too. If you only have "large" bills, the drivers never seem to have enough change.
The most incredible thing about UPI is how it was embraced by even the poorest in the remote corners of India. One of the former finance ministers of India talked in a dismissive tone in the parliament about rural India adopting digital payments when the current government announced "Digital India" plan. Some one made a meme video out of it mocking him.
Super affordable smartphones and cheap and fast 4G data, great apps like GPay and PhonePe with lots of gamification and cashbacks and ubiquitous merchant acceptance through apps like PayTM, PhonePe and GPay were key drivers for this.
Then, demonetization and covid were accelerants to achieve critical mass. Post 2022, its been unstoppable.
Cash is a less than optimally efficient part of the current economic systems, not unlike credit cards are The logical conclusion of technological development in this area would be something like a micro hardware security key storing blockchain wallet keys implanted inside your hand, activated by your thoughts or a certain movement or something, at least as far as I guess.
There are 5 parties in UPI (or any payment system really):
1. bank customers, 2. bank, 3. payment network, 4. 3rdparty apps (TPAPs) 5. merchants.
UPI is free for #1. It costs #2, #3, #4 to build and operate the systems. So, #5 pays for accepting payments in UPI. But what they pay is far less than what it costs them to accept payments via other means including cash. Also, #2 pays somewhat because it is a service their customer values. Banks also like it because the network fees are far cheaper than other networks like Mastercard and Visa.
Naively someone might think paying and accepting in cash is free. But reality is cash handling can get expensive – leakages (cashier steals), counting and tallying cash, time lost in going to bank branch to deposit cash, dealing with providing exact change etc. are all expensive once you see how convenient and highly productive digital payments is.
Thailand has a similar system - you use your banking app to scan a QR code, either the code is generated and has the amount included or it's printed static paper and you write the amount yourself, then show the receipt to the merchant or they check the notification in their phone. Started in 2017, nowadays it's everywhere, I can go to local market and pay $0.5 products with it. My 12 year old daughter opened her own account as well and didn't need my help, only installed an app and went to ATM that has a special slot for ID card to verify identity. Quite convenient as no need to carry cash anymore.
All countries of SEA have similar systems (even Laos and Cambodia). The one managed by Malaysia now can work in Thailand, Singapore and Indonesia too. I think in the next 3-4 years, these wallets will support inter-change across all ASEAN.
Seems like it's a good example of developing countries skipping technological nodes and ending up with better solutions. For example, most of eastern Europe was already using fiber/copper Ethernet 15-20 years ago, while most western Europe and US were stuck with crappy DSL lines.
In the payment processing sphere, we are stuck with a duopoly that charges insane fees for something that was very complex and labor intensive 50 years ago. But today - if we could start from scratch - the entire payment volume of EU can be processed on a well provisioned computing rack with a software written in less than a year by a small team. It could be offered by ECB as a free service, with strong privacy guarantees written in EU law.
Entire modes of fraud, such as credit card cloning, would cease to exist. Online payments - seamless, safe, and instantaneous, just scan a QR code.
But we cannot start from scratch because the incumbent is good enough and the rent they extract from each member of society is small enough to not motivate them to initiate a switch, even if the aggregate rent is a staggering amount that would be recouped in days of the new system going online.
For in person transactions, NFC is perfect. For internet payments, a dynamically generated QR code is secure and far superior to the current setup:
* find physical card or virtual in an app
* copy paste or insert "secret" numbers, and trust the website won't save them, because they are static
* insert a bunch of personal data which the merchant has no real reason to know, but that is used for "fraud detection" because they don't trust you are the real owner of the "secret" static password
* go back to your phone and get the SMS/3dsecure validation prompt, because it turns out your bank also doesn't trust the secrecy of the "secret" numbers they issued you
* finally, pray to the cave gods the transaction has gone trough the complex duct tape and bubble gum contraption, is not flagged for review or reversed by the various intermediaries etc.
It's all a baroque mess, multiple layers of cruft accumulated over the decades. To compare, even a crypto transaction is much smoother and simpler, navigate to checkout, scan the QR code with your wallet app, press pay and you are done. And that's not to praise crypto, any solution designed from scratch for the age of the internet will be much better.
I'm not entirely sure how you imagine Visa's fees protect you from Linux kernel zero days. More than likely, the unwieldy infrastructure with massive technical debt accrued over decades has a much larger attack surface and uses a myriad of more or less obsolete technology.
Also, the payment system should not be confused with the banking system. Complete control over the payment system would give the attacker the ability to deny payments or make fraudulent ones, but would not, for example, allow the attacker access to accounts not linked to a payment instrument, or allow them to circumvent the limits set on such instruments.
The interop with banking across SEA is pretty cool now, most countries have cross border payments with nothing more than a QR code. And this is down to the hawker stall level.
It's advancing a lot quicker than you'd expect given that many of the countries aren't really that good at coordinating with each other.
QR code still works when either end is low-tech (paper/wearable/sticker), by using out-of-band means (SMS/soundbox) to confirm the transaction.
Further, NFC is usually the first to be left out when manufacturers cut costs to hit lucrative price points.
Apple never implemented host card emulation (HCE) as an API, but that doesn't matter as these payment systems usually aren't backed by a payment card network, thus they'd have to build needlessly complex reconcilliation systems when transactions already debit directly from accounts, and offline usage isn't considered a major use-case.
Nfc needs a special chip qr code needs just a picture and camera. Makes a huge difference in infrastructure cost. Getting millions of shops to put in nfc terminals compared to get them to print qr codes makes adoption a lot faster
To build on the other comments, because anyone can just print up their QR code. Somchai the Tuk-Tuk driver can simply print the QR code for his personal bank account and glue it to the roof of his Tuk-Tuk and now he accepts electronic payments.
Some sellers don't have a smartphone/screen and rely on the honesty of the user (they just ask to show them the receipt). I don't know how they manage their wallet though (maybe their kid or a friend?).
Spending quite some time in both Malaysia and Thailand I can say that the support for cross country payments is still not great. I’m rarely able to use my Malaysian banking app (Maybank) to pay in Thailand. Most of the times when I tried the QR code is not recognized. Which means I still need to carry cash with me all the time.
It’s frustrating though since most foreigners can’t use the QR payment system and most places don’t take card. Thailand is the only place I need to carry cash.
Quite convenient for tracking people's consumption choices and discriminating based on them.
Hi there! We've noticed an increase of fast food purchases in the log of your account. Therefore your medical insurance premiums have risen by 200% to accomodate the change. For lessened prices, you might want to start consuming our Healthy Food(TM) lunch packs by EvilCorp, made out of bugs for the good of the environment :)
This is already a thing, but it works the other way around. Here in South Africa, the largest private short-term health insurer gives you up to 75% cash back for 'healthy food choices' [1] i.e. they effectively reduce your premiums if you signal that you make healthier choices than other people in the fund.
The law in South Africa says that short-term health insurers can't charge different people different premiums, so this is an 'add-on cashback scheme'.
They integrate with 2 big supermarket chains: when you pay with a credit card issued by the insurer's banking partner, your discounts are automatically processed on a line-by-line product level. They also integrate with a fast food chain in the same way, Nandos, and give you a discount for selecting the 'healthier' food choices on the menu.
> This is already a thing, but it works the other way around.
Sorry for being pedantic, but charging "bad customers" $XXX and charging everyone $XXX more, whilst giving everyone but "bad customer" $XXX back, are equivalent.
Only if everyone participates. You'll generally have a third group of "unknown behavior customers". Then it makes a difference what the default price is.
The point is that many countries and systems across the world are softly moving away from cash or pushing against it. A possible next step is requiring digital payment for "sinful" products like cigarettes and alcohol.
yes, it's a thing in places with zero consumer protection and abusive business.
absolutely nobody wants to be like us, sa or au (with brexited uk following close). those are dystopian.
also credit cards will very much NOT share your information. we have decades of privacy laws on them. that's why you have to "join" those programs. it's very much NOT the norm. and decent countries have laws against this "70% fake discount"
I agree than tracking detailed purchase data can lead to serious discrimination and inequity especially in a dictatorship. The use case in your example, however, seems fair:
* The person has a choice whether to consume fast food regularly. It’s their freedom, yes, but they should also accept the costs that come with their lifestyle choices. Similarly, if someone chooses to regularly drive at a daredevil speed, they should pay a higher premium.
* This is different than discrimination based on involuntary characteristics. If someone is born with genetic predisposition to get cancer, or happens to grow up in a city with high carcinogen level, it’s arguably a lot less fair to charge them extras.
The whole point of health insurance is to ammortize the unpredictable costs of healthcare amongst a large number of people. If health insurance companies start discriminating ahead of time based on "predictions of disease" then the whole point of insurance falls apart.
Might as well abolish it and let everyone pay for their medical bills on their own. Which would be actually more fair than paying a "unhealthy food premium" - since you're only paying for actually getting sick, not for the prediction of whatever model the insurance company is using to predict your sickness.
I fear and loathe the future in which statistical models (of sickness, crime, etc.) determine the course of my life. I'd much rather be held responsible for my own actions and accept whatever randomness of the universe throws at me, than be a puppet of some huge statistical model created to maximize megacorporations' profits.
Accidents and health problems are not completely predictable for an individual, but the rates are for different groups of people. As long as it’s within their power to choose, they should accept the consequences that come with their choices.
If all your neighbors play extreme sports or drive drunk all the time, would you like to pay the same premium as they do in the same insurance pool?
It’s an established practice for insurance companies to use statistics to charge a higher premium for some groups, eg young male drivers, even if many in such a group have a safe lifestyle. If they use a finer grained model, then it’s more fair to people who make a safer life choice.
The profits are largely orthogonal to whether they use a coarse or fine grained statistical model, but more about the level of competition in a given market. Over time, companies using a fairer model might win over the competition, all else being equal.
> If all your neighbors play extreme sports or drive drunk all the time, would you like to pay the same premium as they do in the same insurance pool?
Yes, because choosing otherwise opens the door to discrimination based on many factors, many of which can be completely out of our control.
What if you're working a job with a non-insignificant risk of danger - should your premiums be higher? After all, you chose to work in that profession and to put the last 20 years of your life specializing in it. You should've just chosen differently...
What if you're living in a neighborhood with a high crime rate - should your premiums be higher? After all, you chose to inherit the house and live there and put the last 20 years of your life building a home and a social network there. You should've just chosen differently...
What if you're shortsighted which makes you more of a danger in traffic - should your premiums be higher? Maybe you didn't choose to be shortsighted, but you could change it with a laser surgery or whatever, and afterall, we're just following the model...
What if you're black - should your premiums be higher? Maybe you didn't choose to be black, but statistics show that black people are significantly more at risk of being victims of violent crime. And after all, we're not being racist, we're just follow the model...
Et cetera.
If you allow insurance companies to discriminate, eventually, everyone who isn't following the "safe path" will be discriminated against. At that point, the insurance stops being merely an amortization of unpredictable cost, and becomes a tool to control the population.
Let's take this a step further and make it so everyone has to pay for insurance, the insurance fee is based on income and not choices, and everyone is covered equally.
Also, since it will all be managed by the same insurance vendor, then they can negotiate better prices in the market and make the system more efficient. Of course this will have to be highly regulated in order to make it fair. We could ensure this by having the major policies be managed by officials who are accountable to the public via a voucher system -- if the official makes bad decisions they get a 'no confidence voucher' and someone else who wants the job will get a shot at it.
This system would be far from perfect, but it would probably be better than paying corporations to run it when they are incentivized to provide only enough service to meet market and legal requirements and pocket the rest -- while showing shareholders consistent profit increases, which can't be tenable.
Yes, a professional stunt pilot should pay more than someone with a 9 to 5 desk job.
Yes, someone living in a high risk of car break-ins should pay more for auto insurance.
Yes, someone living in a low-lying area next to the beach in a place known for hurricanes should pay more for flood insurance than someone living in Colorado.
What we shouldn't do is charge people more for being of a certain race or gender.
I have no problem with people getting a discount on health insurance if they wear a continuous blood monitor and show that they only eat metabolically healthy foods that don't spike their insulin and glucose levels.
I have no problem with people getting a discount on health insurance if they wear a fitness tracker and show that they get their 30 minutes a day of exercise.
> Yes, a professional stunt pilot should pay more than someone with a 9 to 5 desk job.
> Yes, someone living in a high risk of car break-ins should pay more for auto insurance.
> Yes, someone living in a low-lying area next to the beach in a place known for hurricanes should pay more for flood insurance than someone living in Colorado.
> What we shouldn't do is charge people more for being of a certain race or gender.
That's a very convenient way to contrast, but where do we draw the line?
For example, should people with genetic diseases pay more? If yes, then how is that different from discriminating race or gender (which are also part of genetics and may affect the risks)? And if not - then why not? Is the reasoning consistent with all the other scenarios you've listed?
Regardless, even if we did agree on a line in the sand, then insurance itself becomes just a class-based amortizer. Rich, fit, genetically lucky people in good neighbors collectively pay less, while the poor, unfit, genetically unlucky people in bad neighbors collectively pay more. Then you might as well not have insurance at all.
Sure, you can't control your genetics (race, gender, birth defects) but you do choose your location, occupation, eating habits and exercise habits.
There was a time when being fit required having more money, but that is increasingly not the case. You don't need to shop at Whole Foods to eat well anymore (Aldi and Trader Joes and Grocery Outlet all carry healthy foods these days).
So being born in a particular place, having your history, your inheritance and most of your social connections in it, it's all just an arbitrary choice?
> occupation
Again, having an option to work in a certain career that brings you enough money to live and feed off your family, that's just an arbitrary choice, too?
What about STDs? They may make you more prone to illnesses. You may say "well, the person has voluntarily chosen to have unprotected sex", but then what about rape victims? Should insurance companies be informed of such private details of people's lives in order to weight out whether the condition is "chosen" or not? And who the hell decides what's "chosen" and what's not?
All I'm trying to say, it's not black and white. You can't just decide to count the "things you choose" and discard "things you don't choose" as most things don't fall cleanly in those two categories, location and occupation being just one of many examples of the gray area in that continuum. And once you go down the path of price discrimination based on anything, you're on a slippery slope towards thought police.
>The person has a choice whether to consume fast food regularly. It’s their >freedom, yes, but they should also accept the costs that come with their >lifestyle choices. Similarly, if someone chooses to regularly drive at a >daredevil speed, they should pay a higher premium.
i'm scared of people that think like this. all digital transactions enables such people to mandate these ideas - the road to hell with their good intentions.
The hubris of this is phenomenal. People have ancestral homes in places that have become carcinogenic because of industrial activity they didn't ask for, the best job opportunities are often in places that you must go to in order for your family to have the best opportunities possible.
The amount of privilege in asking this question is just shocking. As if people can so easily choose where they live. Try telling miners and nomadic construction workers that.
In 2016, India demonetized bills as low as 500 Rupees (the equivalent of $6). People died in the ensuing chaos, and the Supreme Court just that ruled in favor of the demonetisation.
They are definitely generating and analysing this data in the US. I believe the data protection laws in the UK and EU prevent it here, at least to the scale. There is no doubt it could be done though - it's the same basic technology with a different transport mechanism and/or intermediary.
The scale of UPI payments is unprecedented. Perhaps the best payment system in the world by far. My friends who come from US are always awe struck by the pervasiveness and easy of use of UPI payments. They want it so bad in the West!
Don't confuse the check wielding Americans for the "west", for example Sweden/Norway/Finland has similar systems named Swish/Vipps/MobilePay (Phone number based with scannable QR codes,etc) that's taken over between people and smaller merchants (even young people organizing raves use Swish payments on-site despite it being potentially traceable) and the banks/companies involved in those services are now in the process of building cross-national support that probably will let other countries join soon.
I think the main takeaway is that phones and capable app ecosystems was a "hidden" disruption enabler vis-a-vis the traditional credit card processing companies that various actors in various countries has taken advantage of now, the big question is if/when they will make this internationally interoperable (considering the trouble foreigners in Sweden has with being excluded from these "easy" payments that at best requires a card or at worst cash it's an area that needs fixing).
Oh swish is traceable and actively monitored. A few college friends of mine were organizing a party and they all chipped in a 100 kr to one guy (about 25 individuals) who got a call the next day from his bank for suspicious activity.
Interesting to hear, I've heard of Swish has been a bit on edge trying to upsell people on merchant accounts and I wouldn't be surprised if some of these reports go to the tax office.
Still for those involved they wouldn't probably care too much as long as there isn't real-time reporting to the police to get events shut down (although with laxer laws in that area that'll probably fade as an concern).
Not interested on flamewars here. Reading this thread it looks like merits of system is upon peoples arbitrary metrics based on varying perspectives. So a constructive discussion is not going to happen.
So until there is some standardised comparison probably making any statements about merits or demerits, including mine are just opinions without facts.
However, I've spent a lot of time studying the payments space (7+ years now!) and I'll quickly give you 3 reasons why UPI is "better" than Interrac for example :
1) Better User Experience
Systems like Interrac enable instant bank to bank transfers. However, they don't allow for third party applications to initiate payment requests / view balances. Customers are restricted to choosing a bank and sticking with the user experience defined by the bankers.
UPI , on the other hand, mandates banks to accept and honor payment requests generated from "Third-party payment application providers (TPAPs)"
This allows for a much larger variety of payment experiences to be designed, which can be "fit on top" of the existing banking layer.
PSD2 regulations, in Europe tried to achieve this effect, however most banks ended up implementing a custom version of the protocol instead of adoption a common standard.
2) Lower costs
Adoption of the UPI payments system has massively reduced the cost of sending money anywhere across India.
For Indian banks, the cost of sending money via UPI is wayy less than the "Gas fees" required to facilitate crypto transactions or the fees charged by VISA/MC networks to facilitate transactions.
Similarly, costs for a merchant to accept UPI payments are much lesser than accepting any other form of digital payment today (in India and maybe the world).
3) Federated Architecture
From Day-1, the UPI ecosystem has been design to support multiple switch providers, payment institutions and local regulations.
If countries like France, adopt UPI, they won't have to depend on centralized servers hosted in India to run their payments technology.
All their data can be hosted in servers within the country and the UPI instance facilitating French transactions can be tailored to honor local regulations and limits.
This flexibility is not as easy to implement with older payment systems (like VISA/MC).
--------------------
Much of this can also be attributed to the fact that the other payment systems were developed 15+ years ago.
The recently launched, FedNow system adopts a similar approach to UPI. Will be interesting to see how it evolves
I would love to see similar public-private consortium systems in rest of the west like Germany, Spain, France and Australia etc. Until then I’ll consider UPI to be superior to those in the west.
I think there is a standard, so as long your bank’s app supports it and more importantly the merchant actually provides a QR code to scan (which is unlikely).
Then again, I don’t see much need for that when I can just NFC pretty much everywhere (of course the merchant still ends up paying up to 1% on every transaction)
Tapping my phone on an NFC terminal seems much easier and more straightforward than having to scan a QR or install a third party app and having to figure out how to link it with my bank account. There is just probably not a lot of demand for a system like this in much of the west (in cases where you can’t use a card there is always SEPA instant payments)
The QR code has been a far more robust system for the Indian ecosystem which is predominantly filled with low-cost phones of widely different operating systems. A QR code also behaves as a readily identifiable logo of payment and further works from a distance. If anything I prefer the deliberateness of scanning a QR code, clearly similar to half a billion people at the least.
I’ve used both and I prefer NFC over UPI. I just need credit card and phone that supports NFC. No need of phone number, deal with entering pin, scanning QR code, linking account during setup, etc. Biggest plus point with linking credit card is fraud protection.
In US NFC is best and seamless since most people have high end phones. In India maybe UPI with QR code is better solution since you only need phone with a camera.
Depends on what you mean. Instant transfers up to €100k work in Europe's SEPA (and you can indeed use a QR to encode the transfer information with most bank apps, I think). And there is of course the usual contact-less payment stuff at merchants.
That's still not as easy as app payments. There are a number of systems like BLIK in Poland where you have a lower max payment amount, but you just give somebody a temporary 6 digit number and approve the amount they withdraw, that's it. For trusted payment channels you just approve. If you initiate the payment, just give phone number of recipient.
Agreed, but I think for places with a mature payments and debit infrastructure there isn't that much additional business and I suspect most banks' apps will just incorporate that like they do with NFC payments.
Most growth in payments is either new markets or markets that grow a lot, but not completion of rather mature markets (and additional services).
When you compare UPI to western instant payment systems, the most important metrics to look at are consumer choice (banks and experience apps), cost of acceptance, settlement speed and fraud/clawback rates. UPI has broadest interop based consumer choice, free to consumers and lowest cost overall, highest volume of transactions, has fastest settlement and extremely minimal fraud. It is also most inclusive – it works with smartphones, feature phones and soon with only voice calls. It also works offline. And it works for everything from buying a cup of coffee to sending money to your grandma to doing investments in mutual funds and stocks and making large purchases like buying a car.
Just remember that all else being equal, UPI is still a far more impressive system. Here’s the reasons:
1. A 100x higher volume on a normal day.
2. A highly effective and equitable system that somehow managed to succeed in one of the most corrupt and beauracratic nations.
3. The majority of its users can barely read, if at all. Not to mention all the languages involved.
UPI is impressive because it actually made a difference in the lives of the poor. Probably the first piece of internet technology to have a measurable effect on the lives of hundreds of millions of people.
So yeah the case sounds rested in my perspective.
EDIT: also sounds like Swish charges a fee to the banks? Sounds a bit outrageous for a payment system trying to be the best in the world to charge a fee.
> EDIT: also sounds like Swish charges a fee to the banks? Sounds a bit outrageous for a payment system trying to be the best in the world to charge a fee.
FWIW, NPCI charges all banks for UPI too. They’ve been eating most of those costs because the government didn’t allow them to charge (now those charges are slowly coming in). Banks haven’t been happy with the zero MDR regime for UPI.
Doesn’t apply for transactions less than ₹2000 ($24 usd). Might sound like a small amount but most Indian transactions won’t cross that. And the fee doesn’t apply to p2p anyway.
Well volume wasn't the question here (but yes, it's hard to beat anything Chinese or Indian w/o being global). As for literacy most illiterates should be able to use Swish.
Nr 2 though is something that I think might be a reverse though, looking globally mobile payments seems to have been a hit in markets with less well functioning traditional money and credit/debit card markets.
In Sweden cards's (most often debit) with tap-to-pay still rules for most b2c cases like established restaurants, stores and anything with slightly higher value. Swish was mostly started out to facilitate non-commercial person-to-person cases but has now displaced most lower value cash usage (person to person, small vendors, temporary venues).
I frankly don't even know if I have physical money in my wallet anymore since.. well I've not used physical money in a couple of years now iirc.
How does UPI handle payment disputes? My impression is that the direct payment systems do not have chargebacks and are risky for anything that isn't immediate. What do you do if store won't give you return/refund for something broken? What do you if online store never ships? What if food stall doesn't give you your food?
With credit card, it isn't my money for a month until I have to make the payment. If there is a problem, I can chargeback. The possibility of chargeback makes the vendor's support more helpful
In this regard a UPI transaction is the same as a cash transaction. AFAICT it does not handle payment disputes. You can use a credit card if it provides protection against this but now you need to be sure the credit card company is not scamming you (say by charging you bogus fees). As far as I am concerned using a credit card changes nothing when it comes to fraud protection.
That's because you are used to and expect card frauds. In UPI, the only way money leaves your bank is if you enter your PIN. Even standing instructions (called payment mandates) are required to notify you before they execute and you can stop/cancel it at anytime. (like Apple App Store subscriptions, but for everything!).
What happens when you buy or order something online and it doesn’t come, is broken, they won’t take it back, or a myriad of other situations? That’s fraud.
Withdrawing money from a credit card is taking on debt. Credit and debt are related concepts. Ask yourself this will you have to eventually pay interest on the borrowed money or not?
You can have other (non credit, say savings) bank accounts for security too. It's just as easy (or easier) as getting a credit card here (in India).
> Ask yourself this will you have to eventually pay interest on the borrowed money or not?
No, because after a month, there will be an automatic payment from my bank for the balance. In that time, the bank is giving me their money and they’re on the hook for any fraud.
You are taking debt whenever you use credit card. If you miss/forget payment, some tech fault or sometimes just because you can be charged hefty interest or charges.
You can keep a separate account for your daily transactions.
Not sure it qualifies as debt. It's just an agreement with your bank to give them that money in a few weeks / days. And if you commit to spending some small amount per year with your card (usually something like $1500), the bank will offer you some nice perks on their products that you don't get by using other payment methods. If you use something like UPI and you are making some kind of deal with your bank, you are basically losing money.
Credit card annual interest rates can be as high as (or even higher than) 50%. This is not trivial, it can (and does) ruin lives. It is a type of debt (though conditional).
I don't know about other areas, but in the West the overlap between credit card users and people who can get a decent loan at a <10% interest rate is very high. Which is why for most credit card users, credit is a no go if they are not paying it back quickly. UPI counterpart's use case is to send a bit of money to your friend when you share a meal etc.
You have to remember to pay back your credit card debt before the clock runs out. Once you make a UPI payment the transaction ends there (because the money is debited from your bank account and you are not taking on a conditional loan). You don't have to remember to pay the UPI company anything after the fact. I hope this explains how UPI is different from credit cards.
> You have to remember to pay back your credit card debt before the clock runs out
In my experience paying with credit is a fire and forget action, since the money is debited automatically at the end of the month, with no interest. The UX is great, since it only takes a card swipe [as long as I have the funds to pay it back and I'm within my credit limit].
In an scenario where you are not debited right away, I agree completely. But I would only expect that to happen by accident or if the user lacks the financial literacy to understand there are better ways to buy whatever they want. I may be missing some financial corner cases.
I don’t remember when was the last time I’ve paid my credit card, I’ve set it on auto pay. Plus I accumulate enough points at the end of the year for one way trip to India.
> UPI is directly connected to your bank account. It does not go through VISA, Mastercard or whatever.
This is technically incorrect. UPI is connected to NPCI, which runs the platform and charges the participating banks for this service. Same for RuPay cards by NPCI.
I’ve used credit card for more than 10 years and I’ve never paid any interest in those 10 years. If you pay your bill in full every month then there’s no interest charged.
Not sure about US, here in Germany, I really love the tap-pay(NFC based) usually everywhere(except some random kebab shops). It simply works regardless of me having an Android/iPhone or simply just a the nfc enabled card.
I don’t need to open another account, fumble with one-more-app or anything. Also apple-pay appears to mask my CC/DC number as well, so better safety.
I want it everywhere badly in west as well as east and middle(-east).
I am familiar with UPI and few similar things in other neighbouring countries(looks like every SEA country has its own entirely different version of it and some country has almost 4-6 competing copy-cats!).
I’m sure your nfc card/phone works great in Germany but it’s worth noting that part of the reason is that your card is likely Mastercard/visa. Here in the Netherlands tap and pay is also seamless with maestro cards… but the moment you try to use it internationally, POS machines reject it (“out of network” or something). If you have a diner’s card or an American Express card you might notice how many terminals/pos’es reject those as well.
> I want it everywhere badly in west as well as east and middle(-east).
It's already there.
With the exception of the US, almost every country I've traveled to in the Middle East, Asia, and Europe has tap-pay enabled. The Middle East has virtually everyone paying with their phones via NFC. In India Apple Pay doesn't work but when I travel there I can use my phone every time. NFC cards are also the norm.
We opted fo chip-and-sign over chip-and-pin, so it's probably safe to assume that everything we do is a touch less smooth and safe.
Then again, we don't really the regulation framework for making me feel like cell phones are a safe way to move money around. (Because I have trust issues with tech.)
Probably not everyone, I hate QR coded based payment systems but prefer Apple Pay, so the apps won’t have my camera access. Same applies when folks from China claiming Alipay or WeChat is the best payment system.
It’s not just QR. Plenty of other modes of payment supported including Whatsapp and Google.
The government aggressively manages the system to prevent any single company from getting too much weight and forces them to address scams or other system occurs in almost real time by the threat of being thrown off the rails.
> The government aggressively manages the system to prevent any single company from getting too much weight and forces them to address scams or other system occurs in almost real time by the threat of being thrown off the rails.
It’s actually shocking that only a few years ago RBI was concerned about concentration risk of having NPCI (the platform operator of UPI) and invited proposals from banks and companies for NUE (New Umbrella Entity) licenses. Then something changed and it canceled all those proposals.
NPCI has a monopoly on instant fund transfers (leaving aside the RBI run RTGS). NPCI wants to limit concentration risk among its clients by trying to push for lower market share among competitors within its platform, like Google Pay or WhatsApp Pay.
As for scams, there are plenty of them on UPI every single day, and there’s no way to get any fraudulently transferred funds back without filing a police complaint and waiting for them to do their jobs (and greasing their palms depending on the amount for the job to be done).
usually people initiate transfer using 10 digit phone number.
i really dont like QR codes too because most of the time either the QR code is not oriented for easy scanning or worn out and no longer scannable.
I‘m Indian living in US. I would rather prefer NFC solution like credit card attached to Apple Pay over UPI. Once you use NFC with Apple Pay you are not going back to UPI.
Plus credit card comes with fraud protection and credit card points that I can use for more travel.
The major difference between UPI payments and Credit Cards is that there is no 'surcharge'. This is what makes it very viable for small merchants to accept payments of minimal amounts.
> “All these parties get a slice of the transaction data,” Lakhsmanan said. “This is built into the UPI system, which works on the model of ‘data maximisation’ – collecting and sharing as much data as possible.”
> The amount of data shared on the digital spending habits of consumers is significantly more in UPI as compared to traditional forms of digital transactions. “In a card payment system, such as credit cards, there are fewer parties,” Lakshmanan explained. “Further, the data stored is not identifiable, since it stores credit card numbers, that too in a redacted fashion.”
> But since this is not happening, companies may have to resort to other ways to make money. Said Jonnalagadda, “The lack of merchant discount rate [charges for processing debit and credit card payments] is a disincentive to all middle parties in the transaction – banks and apps, so they are forced to cope by upselling other services or collecting data and looking for data monetisation opportunities.”
This is why banks have never been happy with UPI because their costs to support aren’t fully recovered and it’s a drain. They’ve supported it mainly because of the government pushing them to. MDR (the charges the merchants pay) started coming to UPI too, a few months ago. The “free” party won’t last a lot longer.
UPI payments to merchants have had MDR for a while now. And there is a government fund to compensate banks as well. Cost on its own isn't the real reason for banks to be unhappy. Banks were unhappy because they were not used to this kind of pace of feature growth and user growth. It put operational stress on their teams and their relatively old systems (much newer than western banks). They also saw it as a zero-sum game where UPI had opportunity cost w.r.t growth/profit in credit cards. But the reality is somewhat different. Affluent class still uses credit cards (for loyalty points, irony!) and cards market has grown quite well too. And as digital usage expands and banks have embraced digital, they see UPI as an engagement driver and they make money on selling other financial products including credit cards and loans. Anyone who isn't thinking this way will be killed by competition soon enough.
This is exactly why banks are unhappy - they have to bear the infra cost. This is also the reason the government is trying to push UPI wallet. I suspect at some future point UPI (non-wallet) transactions will be charged a small fee and wallet transactions will not.
Banks are in general happy as any cost is offset by reduction in cash handling cot. ATMs installation and maintenance are costly, branches even more so, you can reduce that. Also, for the merchants, cash handling cost is greater than 0.
> I suspect at some future point UPI (non-wallet) transactions will be charged a small fee and wallet transactions will not.
Right now, it is other way round. Wallet transactions above ₹2000 attract some fees for merchants.
The next leg of growth for UPI is already underway with the inclusion of RuPay credit cards under UPI. Until last year, UPI transactions would directly hit your bank account balance and flood your bank statement with many small purchase entries.
Linking a RuPay [1] credit card to a UPI app provider such as Google Pay in India allows users to pay through their credit card [2].
This will in turn boost transaction volume on India's indigenous RuPay payment network, and it will probably show its impact on Visa and Mastercard.
That's exactly how UPI works. The protocol and payment network is operated by a section 8 non-profit pseudo-government entity. All banks are mandated to connect to it. As a customer you can have your account with any bank and be on UPI. Then, a bunch of non-bank third-parties are licensed to build UX apps. Google Pay, PhonePe are examples of this. They tie up with a bank partner to get access to the APIs. Then they can acquire customers onto their app and facilitate transactions. The customers with any bank using any UX app can send or receive money to anyone on any bank or app. No walled gardens permitted and actively discouraged.
For UPI, which is created and run by NPCI (an organization comprising a consortium of private and public banks), there is an “official” app called BHIM (Bharat Interface for Money). Anyone who has it doesn’t have to worry if the other person is using Google Pay or WhatsApp Pay or another app. Banks also have their own UPI apps or include the UPI feature in their banking app. All these apps work on the same platform, which is UPI, which in turn is supported by all banks.
Well that’s the point, UPI is literally interoperable and you can use any app you want and it just works. It’s not Indian’s fault that there is no such standard worldwide.
there is already a standard. it's SEPA/SWIFT and works on IBANs independent of any banks.
but it's use case is tiny in most of the world. most payments aren't made to people you want to give money to. most payments actually go to sellers. as such what people use in developed countries is their credit card.
Swift is slow and expensive as hell, the fees can run into 10s of dollars per transaction. SEPA is limited to the EU, not even the official candidate countries have it.
India's largest denomination banknote is now just Rs. 500 or $6 after their recent ban on the Rs. 2000 notes. Thus, online payment becomes the only way to transfer any meaningful amount.
UPI is one of the best payment systems invented and in under 10 years has more transactions, use cases and ease of use than cryptocurrencies which is clearly terrible for payments.
This shows that UPI has the potential to scale beyond India yet crypto cannot scale at all.
As we see more of these payment systems emerge, crypto will become more important. The thing about large centralized systems it that sooner or later, they will end up with more virtual units than they can back with real currency and there will be a run on these platforms. History may not repeat itself, but it rhymes. Centralized systems are inherently unreliable and impossible to reliably audit as they can self-report anything. Whatever that single database system reports is treated as true, end of story. Nobody else can verify or contest.
The fiat monetary system is itself just made up of a large number of centralized banking systems which have probably issued more units than they claim/believe. But the critical difference from private payment systems is that because the banking systems are treated as the sources of truth to represent the national currency, they can never run out of units. The way this problem will manifest itself is probably through inflation as the banks will have all these new currency units being created out of thin air due to thousands of different system flaws or exploits across thousands of different systems... These counterfeited digital units will be accepted as payment just like legitimate digital units; there will be no way to tell the difference as all the banks inherently trust each other (see correspondent banking). Essentially, fraudsters will control much of the new money minted by various centralized systems which will give them a lot of power in the markets.
The reason why crypto is important is that it's publicly auditable and cannot be counterfeited (neither accidentally nor intentionally). I believe that eventually, most economic participants will not be able to get a hold of the national fiat currency no matter how hard they work or how valuable their work is but some other people will have no difficulty getting hold of that fiat currency and they won't work at all (they won't need to). This contrast is going to be the catalyst that causes people to move to crypto as it will cause hyperinflation due to large fiat holders being unproductive members of society and crypto holders being comparatively productive.
So why is it that UPI has gained more usage in one country than crypto has worldwide in a short space of time?
Even MPesa has more usage than crypto has in more countries since it was launched around the same time that Bitcoin was released.
Even with all of this, cryptocurrencies such as Bitcoin having sluggish transactions per second causes those to just use centralised systems such as UPI.
Those in crypto circles keep heralding the phrase 'banking the unbanked' but it seems that those people in 'unbanked' countries have built a better system than crypto was intending to solve in under 10 years.
It stands to question crypto's relevance in the first place as a means for payments (not speculation which it is mostly used for)
Crypto is mostly a store of value and an accounting ledger (I.e. to represent ownership). It's the thing people would run to if there was a run on payment platforms. That's why it will always be more valuable. Cryptocurrencies represent a safer place to store wealth and the smaller transaction throughput is worth the substantial amount of additional security it provides. Payment systems will always be more disposable and geared around large quantities of small day-to-day transactions. It doesn't make sense to hold any substantial amount of money on these platforms.
UPI payments used to be a little hit or miss a few years ago but they have been almost flawless for me over the last year. Apps have matured and show a warning if the recipient or self network is down rather than initiating a transaction that might never complete. The only roadblock now is to figure out a way to handle large volume days such as new years when the network is overwhelmed at night.
- Cronies of government have captured the technology stack making themselves key players that can control and monetize this space.
- Traceability of all petty transactions -- enabling building of super rich profile of individuals / orgs -- ripe with potential for misuse.
- Leaving a trail of your PII like name / UPI ID (which in some cases is your mobilenumber@upiprovider) / last few digits of bank account number etc with all random people you transact with -- like taking a rikshaw ride or buying potatoes in a street-side vegetable market. (99.9% of these are harmless -- but the small fraction can invite intrusion / enable harassment)
- Over enthusiastic adoption of digital payments to the exclusion of other options forcing people to use apps. And the newer payment mechanisms -- opening newer avenues for scamming the less savvy / elderly / vulnerable.
- Pushing this change to people rather than letting the benefits and convenience naturally lead to adoption -- after the flaws are slowly uncovered and fixed through early adoption by savvy people (see Demonetization of 2016)
- This blind worship of technology as a silver bullet that cannot be criticized (or you are labelled a foreign-sponsored detractor / anti-national / india-hater whatever) extends more broadly into adjacent areas like the Aadhaar national ID system, linking of it to all spheres of citizen services from birth to death including voting rights and banking.
> Traceability of all petty transactions -- enabling building of super rich profile of individuals / orgs -- ripe with potential for misuse.
How is that any different to what Visa and Mastercard can do? Speaking for myself, *every* purchase I make now, no matter how petty, is made with credit or debit-cards which go through their payment networks. The only exceptions are my house' landscaping (still uses paper cheques), buying weed (all my local dispensaries in WA are cash-only due to the federal bank embargo on the legal cannabis industry), or personal transfers over Zelle/PayPal/Venmo - so I'm sure Mr. Mastercard has compiled quite the dossier on me by now.
Minor correction - prior to UPI, transaction either happened via cash OR didn’t happen at all.
I think the hidden value of UPI is that it makes doing business easier which is of huge value. People sitting on money has never helped any economy…especially at the level that UPI operates - ie enabling petty spending greases the wheels of the economy and lifts people out of poverty.
For example, say I want to buy coconut water on a hot day. Earlier, I’d go without if I didn’t have change. Now I use UPI. I benefit from fresh coconut water. The seller benefits from my money going to his bank account.
Even GWB told people to go shopping after 9/11 so that the wheels of the economy would keep churning.
That traceability of transactions contributes to expansion of the tax net. About ~2% of India's population pays income tax and <12% of the population files tax returns.
For the longest time, certain professionals such as doctors running neighborhood clinics earned money only in cash, allowing them to skip the tax net or claim to tax agencies that they attend to many patients on a charitable basis. This is changing quickly with patients walking into clinics insisting on paying digitally, pushing doctors to open current accounts and have billing and payment systems.
Almost each and every concern is applicable to VISA/Mastercard system too. UPI is just another alternative who isn't a member of that elite card system club but one who has carved a niche of their own.
> Almost each and every concern is applicable to VISA/Mastercard system too.
Not really, when you make a payment using credit or debit cards, your name doesn’t go to the merchant (and doesn’t have to, since you can enter any name online when entering card details). Your phone number also doesn’t go to the merchant from the card number unless you decide to share it. In the case of UPI, the receiver gets the full name and many a times the phone number of the sender since that’s the most common UPI identifier.
It's both. You can transfer/receive money to/from anyone with either a QR code, a UPI address like `batman@upi` or a mobile number.
You can also setup mandates (autopay) for recurring subscriptions like Netfix. Unlike Credit Cards, you can even bypass the merchant and directly cancel an autopay through a UPI payment app.
Not nearly as convenient. Do you use Interac to pay for a $1.50 coffee regularly straight from your phone? Send money to a friend without needing to exchange emails/phone/passwords? Be completely fee-less no matter what bank you use? Not require "acceptance" on the other end? Be notified and require approval before a merchant can debit your account? From what I understand, UPI has all of these things and Interac does not.
UPI is not free and people should really stop parroting that talking point. It is free, FOR NOW.
There are plans in place to charge a 1.1% fee for transactions to merchants. The indian government claims that there will be savings via banks handling less cash but it provided exactly zero in the way of calculations, estimates or data. In 2022, the indian digital payment industry expected a net loss of around 60 million USD.
Nah, For a system similar to Interac they have NEFT, RTGS and IMPS which are bank acc to bank acc transfer. UPI requires bank account but you need UPI id to transfer the fund.
> UPI requires bank account but you need UPI id to transfer the fund.
UPI requires a bank account, a mobile phone number linked to the bank account and a smartphone to transfer funds for anything other than a trivially small payment (tiny payments are now supported on feature phones).
That’s … not correct. Modi’s demonetization was a huge forced driver of digital payment adoption. It’s what spurred most companies into kicking off their UPI efforts
Shooting several people in a bid to get them to hospital to have their corneas scanned for cataracts can also lead to lower cataract rates. That doesn't make it the best way to get people to scan for cataracts.
Better infrastructure, in some parts of the country are needed, a lot (1)! There's also a lot of merchants of some parts of India that do not accept UPI-Payments (2) and so if these were fixed - we will have an in-destructible financial service, at the hands of each and every person.
1 - In many cases for my Dad, it had failed due to poor internet in the area.
2 - I heard from an article that a lot of merchants in Mumbai do not accept them.
Many countries have a single dominant privately owned e-cash system. The only alternative to a future with centralized financial systems, where the individual's right to transact won't be at the total mercy of the whims of forces they don't control (e.g. a corporation which deems their credit risk as unacceptably high, a political zeitgeist that deems their unwillingness to get vaccinated as making them deserving financial isolation, an authoritarian regime deeming their political outspokenness as too great a threat to their power, etc) is the ascendance of a permissionless decentralized financial system using a ledger with distributed consensus, like the public blockchain.
Since this thread is about an article celebrating UPI's 10B transactions/month: That means between 4133 (28 days/month) and 3733 (31 days/month) transactions per second on average.
Bitcoin is at 7 transactions per second.
The bitcoin blockchain takes ~500GB these days. At UPI's transaction volume, it'd take 250TB by now, replicated at various sites.
Whatever you think of blockchain, it has some serious work ahead.
Since then, layer 2s (which are the principal execution layer of the modular blockchain stack the article above expounds upon) have seen exponential growth in adoption, and mounting innovations bringing them progressively closer to their theoretical potential of 100,000 transactions per second:
The only fundamental difference inherent to the respective designs of blockchains and traditional banking, is censorship resistance through genuine self-custody. The former is designed to provide this quality, and the latter is not.
Put another way, there is nothing inherently scammy in using a distributed blockchain to record balances, and cryptography to authenticate updates to the balances. While opening the door to financial contracts to every one in the world with a computing device may make scam offerings more common, it's overly simplistic and lazy to resort to a caricature of crypto tokens being, as a rule, scams.
Articles like the ones you linked above want a return to serfdom, under the control of officialdom. There is no other conceivable reason why someone would not want people to have at least the option of taking custody over their own money, in a form more useful than physical cash.
> Ordinary person: “Your weird Internet money sucks to use. It’s slow and expensive. I lost my coins by mistake and it can’t be fixed. If I get hacked it can’t be fixed either.”
> Bitcoin advocate: “But everyone wants [list of ideological aims held only by weird people]! Everyone I know, anyway.”
But in specifics, censorship resistance? I just read that in an article.
> “You get on an exchange for as long as you can, until they shut your ass down,” says Knox. “You quickly [run out of exchanges], so you sit on a lot of useless money. The whole ‘crypto is permissionless and censorship-resistant’ thing is a bunch of bullshit.”
Being slow and expensive doesn't make something a scam. If you falsely label the blockchain as a scam, and want people to not have even the option of using, I contend that your real issue is with people having self-custody over their money, and thus you believe in a modern form of serfdom.
There is not a word that would contend any of the arguments made. If you meant:
> The only fundamental difference inherent to the respective designs of blockchains and traditional banking, is censorship resistance through genuine self-custody.
Then this is nonsense. The fundamental difference between the two is that one deals with real money while the other does not.
To be frank, only an extreme minority cares about censorship resistance, especially when it comes in a form of inconvenience. In the last 10 years, we’ve seen again and again even within cryptoheads, the choice of storing their money in a centralized place (Binance, Coinbase, FTX) rather than self-custody.
It’s just people have limited amount of time in a day, and caring that government X can trace their transaction is waste of time. Also, in the last 3 years of lawsuits, we’ve kind of seen how crypto payments are traceable as well if someone really wants to find the source.
A huge proportion of crypto is self-custodied. The important point is that with crypto, people have an option of self-custodying, in a form of convenient, secure and useful than physical commodities.
Even without anonymity, it raises the cost for the government to enforce broad restrictions, because the chokepoints—which are intermediaries like financial institutions—are gone.
In any case, anonymity is a gradient. It's a question of how much resources a state has to expend to track a user, and that value can be increased with better privacy technology, so that the state has to eschew broad-based restrictions on mutually voluntary interactions and focus its investigative resources on only the most dangerous actors, who engage in genuinely predatory behavior (murderers, thieves, etc).
Why wouldn’t this hypothetical authoritarian government also just ban the use of crypto currency? If they then ban you from transacting while in their jurisdiction, and you don’t become homeless, starve to death, and so on, why would they not arrest you for clearly violating their unjust laws when you pay for those things in crypto?
An institution like physical cash can be powerful/deeply-embedded enough to survive authoritarian governments, and I presume the same would would apply to a widely adopted electronic cash. The political cost to do away with an institution grows in proportion to how pervasive it is.
That completely side steps the question at hand. You, a citizen of an authoritarian regime, are banned from doing transactions and participating in the economy because you are a dissident or not vaccinated or whatever. Why would that ban not also include cash and crypto transactions?
Firstly, that ban would be harder to enforce without centralized intermediaries that can be deputized to blacklist the dissidents.
Second, it is politically and generally legally easier to prohibit a class of interactions involving a subset of the population (e.g. those who refused to be vaccinated against COVID) by way of prohibiting intermediaries from interacting with them. So for instance, restaurants were prohibited from serving the unvaccinated in many jurisdictions, but the unvaccinated were not prohibited from patronizing restaurants. The authoritarian policy was easier to enforce like this, because the direct target was commercial establishments, which is a smaller group whom the population at large is less likely to defend, and a group that is already subject to greater restrictions.
Easier still to enforce restrictions on would be handful of financial intermediaries. Another example would be restrictions on investment. The SEC prohibits companies from selling stock to the public without meeting onerous registration requirements, but it does not prohibit the public from buying stock from companies without SEC approval to sell stock. The ban on the stock issuer is enough to deny the public the ability to invest in non-SEC-approved stock, and it is politically much more viable than imposing prohibitions directly on the public.
The administrative and political cost of imposing authoritarian policies increases in proportion to the size of the set of parties that need to have their actions restricted to effectively enforce the policy.
The war on drugs doesn’t stop people from using drugs yet many people are in prison because of drugs. If cost was a reason not to do it, most drugs would have been decriminalized and effectively made legal decades ago. Meth is not a legal currency you can use to exchange with your average store so despite that being an anonymous decentralized “transaction”, almost no one would make it. Substitute meth with bitcoin and ask yourself why would the average person in an authoritarian state not comply if making transactions in bitcoin was illegal? If the protesters of the Iranian government were using cryptocurrency would they avoid arrest?
The solution to, the government is extrajudicially spying on our transactions and without due process blocking people from their finances, is not a system that uses an immutable public ledger. It’s reforming the law to protect people’s right to privacy and due process. It’s getting rid of the authoritarian government that strips people of their rights and freedoms.
>>The war on drugs doesn’t stop people from using drugs yet many people are in prison because of drugs.
Governments can engage in broad based prohibitions that affect large subsections of the population, but they are less likely to do that than imposing restrictions on smaller subsets of the population who constitutes chokepoints through which a much larger number of people can be prevented from engaging in an interaction.
Earlier I made the point that:
The administrative and political cost of imposing authoritarian policies increases in proportion to the size of the set of parties that need to have their actions restricted to effectively enforce the policy.
That does not imply that growing the size of the minimal set of parties whose actions need to be restricted for the state to successfully repress a class of interactions guarantees that that class of interactions will not be repressed. It means that fewer governments, in fewer contexts, will pursue a prohibition, as the size of that set grows.
If you're looking for a silver bullet that guarantees a people will live free of tyranny, then the blockchain is not it. It is just one of many institutions that counteract the tendency toward repression. And that's the best any institution can ever be.
>>The solution to, the government is extrajudicially spying on our transactions and without due process blocking people from their finances, is not a system that uses an immutable public ledger. It’s reforming the law to protect people’s right to privacy and due process. It’s getting rid of the authoritarian government that strips people of their rights and freedoms.
The solution is to pursue both. When the political track fails, a non-political check on the power of the state—like wide adoption of cash—can potentially save a people from greater levels of tyranny.
It might have been a marginally acceptable argument 5 years back. Not anymore. the Winkelvii have redobuled the image of the charlatans they are, alongside every single person I have ever encountered in my life or in media who promulgated crypto bs. I have long since been successfully using crypto advocacy as a way to avoid people I should just not bother with and have been living a happy life.
To me the argument has gotten dramatically stronger over the last five years as crypto's real world utility has grown and its full potential has come closer to being realized, while increasingly mainstream figures—including the most successful venture capitalists of this generation—acknowledge its inherent utility.
The anti-crypto contigent are consistently small-minded neurotic individuals who could be safely ignored if they did not back repressive government measures like futile COVID lockdowns, or a "War on Drugs" or "War on Crypto".
While I agree with many of your points, in this context, UPI is just a money transfer platform. It’s not currency or a currency equivalent of any sort.
There is a CBDC (Central Bank Digital Currency) in a pilot phase in India since last year.
The UPI is an interface for the Immediate Payment Service, which is a payment network owned and operated by the National Payments Corporation of India, which in turned is owned jointly by the Indian government and an association of private Indian banks: the Indian Banks' Association.
I personally think a centrally owned service like the IPS is very useful. I just think we would be better off having a permissionless and decentralized alternative that has wide enough adoption to make useful and hard to prohibit, to both provide competition to the centrally controlled network, and to act as a failsafe in case that network is mismanaged and run in an abusive fashion, e.g. locking out those who refused to get a COVID vaccine.
I was recently in India a few weeks ago for a friend's wedding. I am not an Indian national/citizen/whatever and my experience related to anything tech and money was absolute awful (esp the obsession with OTPs)
* The problems start as soon as you land at the airport. I land at the Delhi airport, my friend has sent a driver to pick me up and gave me his contact info. I try to connect to Airport wifi and bam it's asking me for an Indian number to text an OTP to connect to the public WiFi. Why is having an indian number at the Delhi INTERNATIONAL AIRPORT an expectation? What do they expect foreign travelers to do? Ridiculous. Luckily I found someone and asked to use their phone to whatsapp the driver and figure out where he was.
* Foreign credit cards are hit and miss. I have 2 credit cards, I let my bank know I would be traveling and I still could not reliably use them, they worked maybe a fraction of the time. Apparently Indian government added some "security" requirements earlier this year to "prevent fraud" that ices out a large number of foreign cards at many payment tills. This essentially makes India a cash-only economy for foreign tourists.
* If you try to use your foreign cards while shopping, many places will ask to send an OTP to your (indian) number even for relatively small amount of money involved, and again as a foreigner you are out of luck.
* Since I can't use my cards reliably, I am now forced to carry around cash. Worse... the highest denomination available is 500 rupeees, which is equivalent to about $6. This means that if you are planning on doing any type of shopping as a foreigner you have to carry a fat wad of cash on your person the entire time. I intended to do some shopping, eating out and drinking which meant I had to carry around 20,000 ruppees at all times, which was neither comfortably due to how fat that wad of cash is, not relaxing as I am constantly worried about losing it.
* I finally decided to get an Indian phone number to get around all the OTP nonsense and get some data while walking around. And bam to get an Indian sim card you need an indian ID or as a foreigner go through an application process involving a bunch of documentation (and not trivial documentation, requirements like a picture that matches the exact dimensions accepted by them) and it's not a quick process. Red tape upon red tape to get a sim card for normal usage! Thankfully, someone helped me out with a SIM card they purchased via their govt ID and gave it to me saving me the pain.
* The pain doesn't end here. After I get my sim card, I realize I need to buy a bit more data. Easy enough I think in my head... there's even an app from the provider! I pick the upgraded plan and try to buy via my credit card and boom, international credit cards are not accepted for e-transactions. I literally just want to give them the equivalent of $10 to get an additional 25 gigs of data and I can't do it online. Again, I asked someone to buy it for me and paid them in cash.
* Then I wanted to buy a friend a gift that is only available on Amazon. The red tape strikes, apparently as of this year Amazon India can no longer accept foreign credit cards as methods of payment due to "security and anti-fraud requirements" by the indian govt. Again, I have to find someone to buy it for me from Amazon using their card and pay them cash for it.
The bad is that everything is so needlessly complicated and red-tapey for foreigners. Things that should be trivial are hard.
The good is that you can always find someone to help you circumvent the red-tape by paying them cash :).
You pay for a nice hot cup of ₹10 Chai on the streets but then you got a phone call later on - naively to upsell something, or the next step up, trying to scam you. Unlike me, my wife continues to pick up every incoming phone calls. We have had enough calls from people whom she paid via UPI trying to sell or this/that and what not.
There is a scam going on in India. Random females, who are either naked or scantily clothed, will call up on WhatsApp Video. If you pick up the call, say while in the bathroom and not fully clothed, they will take screenshots and threaten you that they will make that picture “viral” to extort money. I won't be surprised if there is an under-belly of phone numbers and other data being sold that were collected via UPI payment transactions.
Cash is still OK at the tea-stalls, the random shop, etc. Well, when I just wanted to have a simple Bombay’s cutting-chai but the chai-guy wants my phone number, and everything else -- I'm not comfortable with that.