A digital payments revolution in India(economist.com)

164 pointsby saikatsg3 anni fa165 comments

https://www.economist.com/special-report/2023/05/15/a-digital-payments-revolution-in-india

178 comments

I simply love UPI! I have seen this firsthand in remote villages and it has completely changed how small merchants accept money. Recently, while I was in Goa and even out in the ocean off the coast, the ease with which I was able to make payments was out of this world.

HeavyFeather3 anni fa

> in remote villages

> the ease with which I was able to make payments

I find it hard to believe that handing cash was "hard" in any way.

b3453 anni fa

Getting cash is hard where there are no ATMs and you aren't offering any services

lucasfcosta3 anni fa

As a note, this is slightly incorrect:

> The Indian model is inspiring others. Brazil’s Pix, which facilitates bank-to-bank payments with a small fee, was launched in November 2020. It now accounts for some 30% of Brazil’s electronic payments (credit and debit cards take up around 20% each)

In fact, Pix is free, which is the main reason why the Brazilian population adopted it so widely and so quickly. Before Pix, you'd always have to pay a significant fee to make bank transfers, and they could end up taking a whole day to go through.

Carioca3 anni fa

Nitpick: Pix is free between people. Companies pay ~1% of the transaction

rippercushions3 anni fa

Nope, on average 0.22%.

https://www.reuters.com/article/brazil-cenbank-pix-idUSL2N2V...

stefan_3 anni fa

That is crazy high, cash back credit card levels

rozularen3 anni fa

in Spain there's Bizum

toomuchtodo3 anni fa

India: https://en.wikipedia.org/wiki/Unified_Payments_Interface

Brazil: https://en.wikipedia.org/wiki/Pix_(payment_system)

US: https://en.wikipedia.org/wiki/FedNow

rnjailamba3 anni fa

Singapore: FAST - https://www.abs.org.sg/consumer-banking/fast

Thailand: PromptPay - https://www.bangkokbank.com/en/Personal/Digital-Banking/Prom...

Australia: NPP - https://www.rba.gov.au/payments-and-infrastructure/new-payme...

Hong Kong: FPS - https://www.hkma.gov.hk/eng/smart-consumers/faster-payment-s...

Philippines: InstaPay - https://www.instapayph.com/

Mexico: CoDI - https://www.codi.org.mx/

Indonesia: BI-FAST - https://www.bi.go.id/en/publikasi/ruang-media/news-release/P...

martyvis3 anni fa

NPP is fantastic. (Often referred to as PayID, Fast Payment or Osko, depending on your bank here in Australia). Last Friday I was able to buy an item from a friend while we both standing in his driveway - he confirmed the payment on his account. He just provided his BSB (6 digit bank number) and account and I did the transfer. We both use non major banks. I have used it to settle split bills with colleagues after lunches. Usually you just link your mobile number or email address. All without bank fees or going anywhere near Visa, MasterCard or Paypal and confirmed in under a minute.

valzam3 anni fa

You can even a phone number instead of use BSB and acc no. Super convenient

toomuchtodo3 anni fa

Thanks for sharing these links! If someone wants to start a Wikipedia page enumerating global instant payment systems, I'm happy to chip some fiat in. Email in profile.

codethief3 anni fa

Europe: SEPA Instant Credit Transfer

https://www.europeanpaymentscouncil.eu/what-we-do/sepa-insta...

https://en.wikipedia.org/wiki/Single_Euro_Payments_Area#Sche...

So far it hasn't seen widespread adoption, though.

cubefox3 anni fa

Germany: https://en.m.wikipedia.org/wiki/Giropay

By the way, according the the Wikipedia article, the launch of the US American FedNow service is imminent. I wonder whether it has any chance against the more expensive but widely adopted credit card payments.

toomuchtodo3 anni fa

Walmart is already preparing to adopt FedNow payments, and submitted comments during the public comment period.

https://www.pymnts.com/news/retail/2023/walmart-hints-at-ear...

https://www.federalreserve.gov/SECRS/2019/December/20191227/...

cubefox3 anni fa

> Walmart has observed a severe misalignment of incentives that has plagued the payments system in the United States for decades. Certain incumbents and large participants enjoy massive profits by stifling innovation in payments, ensuring that account access is limited to a small number of networks, and perpetuating barriers to entry for alternative solutions. Controlling this access allows the dominant players to extract rents from other payments system participants, ultimately resulting in higher costs for all consumers, particularly consumers who are unbanked or underbanked.

They say it how it is.

marcosdumay3 anni fa

They are ignoring the systemic manipulation of the entire market against people deemed "undesirable" or that are just poor.

But well, they probably never noticed it.

hakfoo3 anni fa

In an enemy-of-my-enemy perspective, Walmart comes out as the "good guy" here because their market position aligns best with the unbanked/underbanked audience.

Neiman-Marcus is less likely to complain about their audience not having access to modern payment rails; they might kvetch about the cost of accepting a Platinum Amex, but that's a different debate entirely.

[deleted]3 anni fa

__jonas3 anni fa

but giropay is owned by a private company, not the state or central bank.

also it’s an online payment service, not sure you can use it for direct transfers or in person payments like those others

abdullahkhalids3 anni fa

Also, Pakistan launched its own last year. Unfortunately, no wiki entry.

https://www.sbp.org.pk/dfs/Raast.html

thasaleni3 anni fa

South Africa: Payshap https://www.payshap.co.za/

SanjayMehta3 anni fa

The comments in this thread lack some context. Prior to UPI, the government ensured that anyone with a mobile phone, even just a feature phone, could open a bank account.

This enabled direct transfer of subsidies to eligible citizens.

An earlier PM Rajiv Gandhi had admitted that only 15% of benefits actually reached the intended recipients, the rest being consumed in overheads and corruption.

UPI ensures that even people in remote locations can make payments without having to walk long distances to withdraw theirbcash from a bank. Villages don't have ATMs.

It's more like a debit card than anything else, but you use a phone instead of a card.

As for tracking fears, all debit/credit card transactions are logged so UPI is no different. If you want to use cash, you can do so, but you'd be surprised how many vendors prefer UPI as they don't have to worry about change.

colesantiago3 anni fa

I'm so happy that payment rails services such as UPI, PIX and the like are getting more attention. This is a breath of fresh air compared to last years vile crypto fad.

I'm hoping FedNow in the US completely wipes crypto and the world will follow on from what India and Brazil has done. Bravo!

WinstonSmith843 anni fa

Mass surveillance, yay!

Fed ... what? Anyway, do not worry, your hopes will be fulfilled very soon in the US with the arrival of the digital dollar. More control and surveillance, how delighting!

cubefox3 anni fa

Less control, if anything. Remember how credit card companies blocked WikiLeaks and Pornhub?

WinstonSmith843 anni fa

How could that be less control when it will be in fact a centralized database? Remember how much trouble it was for the Canadian government to freeze the accounts of the Canadian truckers? Now it will just be a request to an "admin"...

hakfoo3 anni fa

There's two entirely different classes of control out there.

A state database will may be centralized, but it's also much more accountable to established legal norms.

Private systems run on their own internal rules, with less formality, appeal process, and recourse.

A major "control" issue is acceptance. A card network can decide (for example, based on fear of public embarrassment, angry stockholders, or pressure groups) to cut off anyone they don't want. The federal government would be tied up in the courts for decades if they acted equally precariously. So it's actually potentially a more reliable choice for "hot button" products like porn, guns, VPN service, etc.

I'd expect the risk of disclosure will get fairly tightly clamped down. With the current system, there are a lot of middlemen and law enforcement or just snoops can find someone to socially engineer data out of it.

Make it a federal thing, and I'd expect there are a lot stronger legal protections and rules available than just "ooh, if PCI hears about it they might complain". If these rules aren't there on day 1, two weeks after first time the local news busts a Senator for paying callgirls with FedNow, they'll be there.

cubefox3 anni fa

Is it really centralized?

WinstonSmith843 anni fa

It will be, that's what CB in CBDC is about.

If you wonder what Governments may / will do with CBDC, here is something which shall be enlightening https://cointelegraph.com/news/the-world-could-be-facing-a-d...

himujjal3 anni fa

Weird there are even negative comments about UPI. That too from people who haven't lived in pre-UPI era.

My father and my uncle both have had history of losing cash to robbery earlier in the past in broad daylight. Snatch and run. Huge amounts of cash. My wallet has not seen any paper-based cash in over 1-2 years now and I live in a Tier-4 town/city.

The habit of not giving the extra 1-2 rupees of extra change has gone. Now, its the exact amount. Plus no one these days have to loan out payments. You can directly pay the amount quick.

The scale and the way UPI has become such an integral part of Indian lives is such so much valuable that the minor inconveniences (Privacy & customer care) are ignorable.

creaper3 anni fa

>The habit of not giving the extra 1-2 rupees of extra change has gone.

Yea, but I bet you are buying a lot of extra things that you don't really need, because it is easy to pay, and you will never run out of cash, because you are always drawing from some treasury that is always online. Earlier, with cash, you go to a bank and get some funds for monthly expenses, and you should be wary of running it out soon, because you ll have to go to the bank again. For bigger expenses, you used a cheque.

Now you don't have to think twice before ordering a takeaway that costs 500 bucks.

Make all exploitation more efficient. That is the purpose of technology in modern human existence. Technologies that does that, will go mainstream, others fizzle out.

saikatsg3 anni fa

https://archive.is/I3eAI

braindead_in3 anni fa

Just one mention of India Stack and no mention of iSpirit/Sharad Sharma at all. They were the brains behind it all. I hope they do something with LLMs as well.

kylehotchkiss3 anni fa

I wish there were better ways to use UPI as a tourist. Like if wise.com could support QR code payments to it. Right now the system isn’t very accessible to those on short term visits.

ffpip3 anni fa

https://travel.economictimes.indiatimes.com/news/technology/...

(Foreign tourists & travellers in India can now make payments using UPI)

kylehotchkiss3 anni fa

Interesting! It took me a lot of googling after reading to figure this out…

The international airports have Thomas Cook booths for exchanging cash to rupees. They now allow foreigners to create an account on this app called “fave” which they can reload only at the airport. This is limited only to g20 countries (that’s an odd requirement considering many wealthy countries aren’t in g20).

It’s a start but still way too complicated to figure out after 10 hour flight and stressful airport entry.

I hope they improve by integrating recharge by PayPal or another internationally useful service.

ffpip3 anni fa

> that’s an odd requirement considering many wealthy countries aren’t in g20

It was during the G20 convention, so probably to promote it in some way

[deleted]3 anni fa

villgax3 anni fa

UPI is just a simpler IMPS(which used mobile number) with email address like handle which again is either mobile@bank or email/name@bank just like Venmo. Nothing revolutionary at all. There is no customer care that you can call & have your problems addressed, you still need to go to your bank for any issues or refunds coz for some reason Indians are not exactly entrusted with being able to raise chargebacks

ledgerdev3 anni fa

Any possibility for some regional/local/state payment system in the US that's not a 3% tax on every purchase?

cubefox3 anni fa

Someone else posted this: https://en.m.wikipedia.org/wiki/FedNow

> FedNow is a service developed by the Federal Reserve for depository institutions in the United States. It will enable individuals and businesses to send and receive instant payments.[1][2][3][4] Banks will be able to build products on top of the FedNow platform.[5]

> FedNow is scheduled to begin formal certification of participants of the program in April 2023, with a formal launch planned for July 2023.[6][7] It will operate on a 24-hour, 365-days-a-year basis,[8] as opposed to the U.S. government's current system that is closed on weekends and holidays.[9][10] FedNow's transaction costs are expected to be about one-fifth the cost of existing payment solutions, which cost merchants an average of $0.23 per transaction.[5][clarification needed]

runeks3 anni fa

> Consumers prefer safer payment methods for big-ticket items. “I use upi to buy chai. But I wouldn’t use it for a plane ticket,” says one architect based in Mumbai.

> There are other flaws with upi.

This doesn't sound like a flaw at all to me, but a feature.

Why on earth would I want to pay a 2% fee for "consumer protection" when I go to a physical store to buy a can of coke?

The reason I do this is only because I have no alternative.

Also, there's nothing preventing building an escrow service on top of UPI, as far as I know. This would be useful for online purchases where the seller isn't entirely trustworthy.

kylehotchkiss3 anni fa

Maybe this is just plane tickets specifically, the government spent like a year and a half yelling at the airlines to refund people in cash and not lousy credits after all the Covid flight cancellations. That was an issue chargebacks would have been very helpful in reducing

nine_zeros3 anni fa

UPI is the best! It is like Mastercard, stripe, bank transfers, Venmo and goolf ol cash combined, only that it is available as a free public utility.

If they only introduce a way to do chargebacks (or a fair dispute mechanism), the remaining few cash transactions will go away too.

Proven3 anni fa

devnull33 anni fa

As a big fan of UPI, I have a concern if people became too much dependent on it. What happens when there is a power outage for extended period of time (due to war, natural calamity, grid failure, etc)?

Most shops in India do not have backup power provisioned.

abhayhegde3 anni fa

You're talking about all hell breaks loose kind of situations and anything basic would be a concern then, let alone UPI not working. There's no universal solutions for such situations. That doesn't mean the country shouldn't be too dependent on UPI.

chupchap3 anni fa

In such a scenario only cash works.

hestefisk3 anni fa

This is also happening in countries like Thailand and Indonesia with PromptPay and QRIS respectively. Walk past most street stall it’s either cash or QR, no cards.

nish15003 anni fa

When you pay a merchant $100 with your card they get about $97. When this $100 has exchanged hands 50 times only $15 remains. The bank owns the other $85.

Cash is a hassle but it cuts out the middlemen. We need a unified payment system in western countries, but it's almost impossible given how much of a chokehold big banks have over our economy.

Capitalism at its finest.

signal113 anni fa

UPI has no dispute resolution (as of now). So if you pay with UPI to someone and have a dispute, good luck. You have to approach the Indian courts to get your money back, which, given the Indian justice system, is… difficult.

By contrast, dispute resolution with cards is much easier. Also, I don’t recognise this 3% figure — not in all geographies.

Eg Europe under PSD2 has 0.3% for credit cards, and 0.2% for debit cards. In Canada, Visa and MC recently agreed to a 1% cap.

That said, I’d be very interested in seeing where the conversations around dispute resolution in UPI leads. Context: Indian banks have already begun to complain about UPI being free, and the Indian authorities had to quickly walk back a consultation around potential merchant-side charges to UPI.

I guess this tension between business, customers, and digital intermediaries is what makes payments an interesting space.

hocuspocus3 anni fa

The EEA cap on fees only applies to interchange in 4-party schemes, i.e. the part that goes back to the issuing bank. PSPs typically charge between 0.7 and 1.5%. But yes, it's possible to do much better than countries like the US. For starters because card-present fraud is virtually nonexistent, and online fraud is drastically lower thanks to SCA.

That said, you're right, there's a fundamental difference between moving funds in an immutable way (whose marginal price tends to zero) and a payment system.

toomuchtodo3 anni fa

Which means bifurcation will occur. Payments where you have high trust and confidence you won’t need a dispute will use UPI or similar instant payment rails. Transactions where you are not confident or are concerned a dispute is going to be required, you’ll pay the transaction fee to use CC rails. Credit cards will become “insured payment” rails for lower trust transactions.

I’d never dispute a payment to my mortgage servicer or electrical utility, but I absolutely might for a rando Facebook ad sale.

signal113 anni fa

> I’d never dispute a payment to my mortgage servicer or electrical utility,

Er. “Never” is a strong word and it depends on scope. There have been numerous cases of overcharging. Sure, I might not dispute the payment itself, but the amount? Frequency? These get disputed all the time.

Many jurisdictions have good consumer protections for this, though, so overcharging will cause penalties— that does provide incentives for companies to do the right thing.

[deleted]3 anni fa

1024core3 anni fa

> UPI has no dispute resolution (as of now).

And cash does??

signal113 anni fa

If UPI competed with cash, that’d be sort of fine.

The problem is that UPI enthusiasts think it’s a perfect replacement for cards. It’s not.

Even with cash, because you need physical presence, you can inspect the goods. Under many UPI scenarios, that doesn’t happen.

So a “and cash does?” comment sounds like a clever zinger, but in reality cash and UPI have different threat models.

Equally, UPI is a useful alternative to cash and cards. The real world isn’t black and white. It’s not like UPI has zero value. But it’s not like cash and cards has zero value either.

Finally, one scenario where cash > UPI is: anytime there’s an internet shutdown. Of which India has an insane number.

colesantiago3 anni fa

You can use UPI offline:

https://www.gadgetsnow.com/how-to/how-to-pay-online-using-up...

This is what I mean with so many misconceptions, falsehoods and just outright conspiracy theories, from people who have probably never used UPI.

signal113 anni fa

> you can use UPI offline

Yes, UPI Lite (local offline wallet) has a transaction limit of INR 200. Yes, 200. With a limit of 4000 per day and the Lite wallet can hold 2000 at any one time.

Good luck doing anything serious with that. Also, good luck reloading the wallet when the internet is blocked.

Note: the context of this thread was a UPI vs Cash comparison. Cash is king when the internet isn’t available. UPI Lite notwithstanding.

And for those unfamiliar with Indian context: internet shutdowns happen at the drop of an hat, at a city or sometimes state/part of a state level. For days or longer. In one notorious instance, for multiple months. There’s little oversight, any local authority can make it happen, with little recourse by the public.

They are a massive failure of local governance in India. And getting defensive about it won’t help you in the long run, if you live in India. Sooner or later, you’ll be affected too.

alephnerd3 anni fa

> They are a massive failure of local governance in India. And getting defensive about it won’t help you in the long run, if you live in India. Sooner or later, you’ll be affected too.

Yep. Welfare Schemes are distributed via UPI, and internet shutdowns often affect regions where there are a number of residents who are eligible for welfare schemes like MGNREGA, PMSBY, etc.

Look at Manipur for example or portions of UP during law and order flairups.

That said, in my ancestral village it is being used as a cash alternative. Almost no one there is eligible for a credit card, and "payment disputes" are resolved with lathis or bandhs.

vivegi3 anni fa

> UPI has no dispute resolution (as of now)

Not true. [1]

[1]: https://www.npci.org.in/what-we-do/upi/dispute-redressal-mec...

signal113 anni fa

The process you link to is Indian bureaucracy at its finest. It also focuses on disputes surrounding UPI payments, ie “I paid via UPI and the money didn’t arrive”. Look at the categories of disputes on that page. The “fraudulent transaction” is extremely narrowly scoped to fraudulent use of your UPI account.

But by “dispute resolution”, most people in payments mean commercial disputes — “I paid for a chicken, you sent me an egg” type disputes. Or didn’t send anything at all.

That’s hard to deal with in UPI, last I checked. But I could be wrong! But then — why do all these UPI disputes and scams keep cropping up in newspapers and social media?

Another scenario is dealing with a fraudulent withdrawal (no matter how it happens) by getting a refund with one phone call. The driver for this is that under most consumer-friendly legal systems, the customer gets a near-immediate refund for any unauthorised withdrawal. UPI => no. It’s damned difficult.

To be clear, this isn’t a problem with UPI as a piece of code, UPI moves money from A to B cheaply and quickly. Great. But the governance that is wrapped around it has serious consumer protection problems.

The problems (eg dispute resolution) will be an interesting one to resolve. Despite the bold “not true <link>” parent comment, disputes in UPI are currently a headache. And part of the reason is the narrow scope NPCI can act in.

vivegi3 anni fa

I use UPI daily.

1. In scenarios where UPI is replacing a cash transaction e.g., purchasing fruits from a fruit vendor on the street (just did it a few hours ago), the transaction is immediate. Disputes are settled exactly as how it would be done with a cash transaction i.e., discuss and settle with the vendor in situ.

India had a separate settlement mechanism called Cash-On-Delivery that was needed for companies like Amazon/FlipKart etc., to penetrate the ecommerce space before UPI came into being. Even Amazon does returns and refunds through their online/app-based customer service process.

2. In scenarios where UPI is replacing a credit card e.g., I order food through a food delivery app and an item is missing. The food delivery app provides a customer service option where they are able to resolve the issue (they could a. deliver the missing item at no charge, b. give me a cash coupon for the inconvenience that I can use on their app, c. refuse to resolve the issue). I haven't had a scenario where the service provider has refused to resolve the issue.

3. As far as fraud is concerned, a couple of months ago the local police visited our apartment complex for a brief meeting to educate people on frauds and safety. They focused on digital crimes and told us about the national helpline for cybercrime. [1] Residents can dial 1930 to reach the national cybercrime helpline to report crimes, including online frauds -- this also includes the QR code scams that you hear about in the media. They register the complaint and guide you with the process for recovering lost funds. I haven't done this myself, but what the officer explained is that based on the transaction details, the national cybercrime control center coordinates with the participating banks on both sides of the transaction to immediately freeze funds. You can also take the complaint number to the nearest police station and get an FIR (First Information Report) filed to get the fraudsters criminally prosecuted.

4. In scenarios involving a buyer-seller dispute, there is the consumer protection laws where the consumer can directly file suit against the provider in a consumer court. These are special courts (separate from the civil and criminal courts) and are very effective in protecting consumer rights. This works for all types of consumer disputes about service/product issues.

This would be the last resort for protecting consumer rights even in cases where a credit card company declines to handle a consumer's complaint on technicalities and is not just for UPI. These courts are at the district level in all states. [2]

People in the west and other developed countries have a lot more of their digital transactions occuring on credit/debit cards and are comparing that with UPI. While what UPI is doing overlaps with a lot of that, it also is more than that in enabling micropayments and p2p payments. So, that is of value for the average Indian resident.

[1]: https://cybercrime.gov.in/Webform/Helpline.aspx

[2]: http://ncdrc.nic.in/districtlist.html

signal113 anni fa

I don’t dispute most of what you say. I’ll only say that you’re a little optimistic re (3) and (4).

Speak to regular (not well connected) people who’ve been through the justice system. It’s not pretty.

But then maybe you’re lucky enough to live in a state with super responsive police and courts. After all, a lot of this stuff is a state subject and can vary by state.

But the stories of hellish experiences seem to come from all around the country.

vivegi3 anni fa

I agree with your statement above. UPI is looking at also getting credit card accounts linked to the NPCI/UPI network in the future. NPCI itself is trying to push RuPay as an alternative to Visa/Mastercard for domestic card payments.

So, a subtle difference from a payment stack perspective is that the consumer protection offered by credit cards is not necessarily a payment stack functionality but a feature of the credit card (just as credit and loyalty points etc., are a function of the credit card).

It is just a slighly different design goal and honestly most users of UPI are okay with it because they favor the cash-replacement offered by UPI.

I will say this though -- the ease of use in UPI is so smooth that if users fail to double check the QR code they have scanned (actually the UPI virtual address) with the vendor and confirm that it is indeed their account (I do it every time), there is a possibility of hackers diverting the funds at the point-of-sale through the use of fake QR codes. This risk is similar to skimming devices installed on PoS machines/ATM machines to steal credit card data.

colesantiago3 anni fa

Glad to see it.

It makes me sad that there are so many misconceptions about UPI that people are willing to resort to falsehoods (such as CBDCs and privacy) and it shows that most criticisms are from people that haven't used it in the real world.

signal113 anni fa

There are misconceptions about UPI all right, but a lot of it is from UPI proponents who have no idea what dispute resolution means.

Order a bed and pay via UPI, say. Get a chair instead. These type of commercial disputes are difficult for a payments service to adjudicate.

When you use the term “falsehoods”, keep in mind that a lot of these criticisms come from people who’ve worked in payments for decades, and know a fair bit about customer protection.

If we’re going to talk about falsehoods, we should also talk about the falsehoods UPI proponents share about card payments.

And to be clear, my focus is customer protection. I don’t give a flying fish about the mechanism.

1024core3 anni fa

(1)

cubefox3 anni fa

> We need a unified payment system in western countries, but it's almost impossible given how much of a chokehold big banks have over our economy.

Credit card companies charge even more than banks.

umeshunni3 anni fa

Most of the interchange goes to banks.

1024core3 anni fa

> When this $100 has exchanged hands 50 times only $15 remains.

Just to nitpick: 0.97^50 is 0.21806. So only $21.81 would remain and the banks would have $78.19

nish15003 anni fa

I used 2.9% + 30cent for each transaction

thatfrenchguy3 anni fa

Only in America are fees that high :)

[deleted]3 anni fa

somerandomqaguy3 anni fa

Plusses and minuses to each system. You don't need to pay the cost of transporting the cash to and from a bank (worst case is armored car transport), and electronic transfers have lower accounting overheads (no need to manually count). And modern credit cards have pretty sophisticated fraud/card theft detection nowadays.

louwrentius3 anni fa

I agree. From what I understood, the Dutch iDeal system (which I love) might become a European standard. It doesn’t cover large parts of the world but I think the fees are not as “insane” as PayPal or systems like this.

aleph_minus_one3 anni fa

> From what I understood, the Dutch iDeal system (which I love) might become a European standard.

What can you tell me about iDeal's privacy aspects? Does it allow anonymous transactions (here it mght make sense to distinguish between

- non-anonymous entity sends money to anonymous entity

- anonymous entity sends money to non-anonymous entity

- anonymous entity sends money to anonymous entity;

"anonymous" is here to be understood as "anonymous to iDeal", i.e. iDeal has no practical chance of de-anonymizing this identity)?

louwrentius3 anni fa

As far as I know only the Merchant and your account is known to iDeal, not what you buy.

sunshinerag3 anni fa

wow Capitalism? Where?

Kenji3 anni fa

solatic3 anni fa

You make it sound like the other $85 that the bank got sits in a vault somewhere, extracted from the economy and hoarded in a stockpile. Actually the banks have their own costs (e.g. salaries) and much of the money is further invested. In fact, the natural state is to keep so little cash on hand that Dodd-Frank forced the banks to hoard more than they otherwise were inclined to.

Yes I've oversimplifying a lot of differences (payments infrastructure vs. investment banking, for one) but the point remains. I do think that day-to-day realtime debit-style payments should be a publicly-operated, minimal-or-zero-fee commodity rather than a massive source of rent, but having access to electronic payments for consumer retail is literally responsible for trillions of dollars more economic activity than you would see if we went back to cash-only.

nish15003 anni fa

Salaries for what? Marketing? Obscene bonuses? Downtown office buildings? It is a manufactured need.

I am simplifying things but if we had a public owned payments system that wasn't a profit centre the costs would be far less.

Even within the developed world the costs are very different between Europe and the US. Your fees are paying for someone's hefty bonus and lobbying expenses.

Again, it has been proven. UPI works.

wildrhythms3 anni fa

Why do you believe the investments made by the middlemen processors and banks are more worthy than the investments made by businesses who the consumer is directly patronizing?

cvjcvjcvj3 anni fa

There are no fee at all using Brazil's pix.

ft-kenya-claims3 anni fa

The article repeats a claim discussed by https://www.tandfonline.com/doi/pdf/10.1080/03056244.2019.16... "that ‘access to the Kenyan mobile money system M-PESA increased per capita consumption levels and lifted 194,000 households, or 2% of Kenyan households, out of poverty’ (Suri and Jack 2016, 1288). It is no exaggeration to say that this article and its specific poverty reduction claim have electrified the international development community."

"If Suri and Jack’s claims are broadly verifiable, then here we have one of the most important anti-poverty interventions of recent history. Anyone concerned with addressing global poverty, including the current authors, should be very happy indeed. However, extreme caution is warranted. This is because the recent history of the international development community is, unfortunately, littered with claims of miraculous poverty-reducing policy interventions, a great many of which are then shown at a later date to be quite ineffective"

The authors critique the M-PESA claims on six grounds:

* Impact of exit not discussed: "while it is relatively easy to provide financial and other stimuli to encourage certain groups to move into petty entrepreneurship, if there is no commensurate increase in local demand at the same time then the zero-sum end result is simply the redistribution of local demand among a larger number of market participants"

* Impact of displacement ignored: "There is [...] no attempt to compare the outcomes of those households managing to establish or expand a tiny retail business with the help of M-Pesa, and those households in the same community that have no engagement with M-Pesa but are already in possession of, and therefore survive because of, a tiny retail business."

* Rising over-indebtedness in Kenya: "they choose to measure specific household increases in incomes and savings attributable to M-Pesa, but fail to calculate the impact of the wider (but gradual) increases in debt also attributable to M-Pesa. Over-indebtedness has been rising to dangerous levels in almost all parts of the global South where access to microcredit has been facilitated by the international development community"

* Accumulation by dispossession: "as of 2018, the ownership of M-Pesa resides with the Kenya-registered company, Safaricom. [... which] is today 40% owned by the UK multinational Vodafone plc [...] [Safaricom] alone accounts for a massive 40% of the total stock market valuation on the Nairobi securities exchange"

* Wealthy versus poor networks: "the increase in consumption they observe could simply result from wealth being passed along fin-tech-enabled linkages to others in the same family or social circle or class."

* Flawed impact evaluation methodology: "M-Pesa agents, just as with other financial units seeking profit elsewhere in Africa, are well known for proliferating in wealthier urban areas where there are more opportunities to obtain large client numbers and wealthier clients, the combination of which is more likely to generate higher financial returns"

The authors conclude: "There is little doubt that fin-tech has the potential to liberate enormous value. The digital finance sector has been expanding at a mind-boggling rate from China to Southeast Asia, from Africa to Latin America. But the core problem as it stands – as illustrated in Kenya and other places around the world – is that the bulk of this value does not go to the poor. Rather, fin-tech is very clearly designed to hoover up value and deposit it into the hands of a narrow global digital-financial elite that are the main forces behind the fin-tech revolution. Of course, this enormous wealth could be redirected towards Kenya’s poor population and reinvested locally, for example through community-owned financial institutions and financial cooperatives, but there would appear to be little time, sympathy, or political support for building such pro-poor institutions when so much wealth can be appropriated by so few so quickly in another way."

alephnerd3 anni fa

An anecdote I posted above specifically about the positive impact digital payments has had on poverty eradication:

In my ancestral village, before cashless payments the nearest bank was 5 miles away in the district/county headquarters. If you needed to take out cash or deposit a paycheck, you'd need to ride a bike or take a bus or walk over potholed roads to get to that bank which was staffed with lazy employees who'd take chai+nashta breaks all the time. With the proliferation of cashless payment options, it's much easier now to deposit a paycheck or buy groceries in these small towns and villages.

fnord773 anni fa

sounds like the exact opposite of crypto

alephnerd3 anni fa

Yep, and it's actually useful for unbanked people.

It's essentially a digitized version of Postal Saving Systems [0] that were traditionally common in Central and Eastern Europe.

Tbf, a lot of the thought leadership done to design UPI+IndiaStack was done by people with an actual background in Developmental Economics+Banking at JPAL (MIT+Harvard), FSI (Stanford), and BFI (UChicago).

A lot of Policy Advising in India+China+ASEAN is done by alumni of those 3 programs.

[0] - https://en.m.wikipedia.org/wiki/Postal_savings_system

ta77893 anni fa

People seem to have a general distrust about the Indian government and the UPI system. There are certainly a lot of conspiracy theories floating around.

The plain idea of UPI is that it is publicly funded digital infrastructure. The US has networks such as Mastercard, Visa, etc. These are privately run digital infrastructure that facilitate digital payments. UPI is publicly funded digital infrastructure. AFAIK it is legal for private digital infrastructure such as Visa, MC, etc to exist. However, due to the tax payer funded nature of UPI the fees are way lower than private digital infrastructure can offer. This has been the main criticism against it by the private players.

Let's be clear, governments everywhere build roads using taxes and offers them for "free" to the citizens. That doesn't stop private entities from creating private roads for a fee. However, no private entity tries to build road infrastructure as it is not a profitable business. Thats the same situation with digital payments in India due to UPI's existence. That doesn't mean that private businesses cannot offer their own private payment networks with value added services to compete with UPI.

The mindset in the west is very different than the east which leads to a whole lot of unfounded criticism on here.

sifar3 anni fa

>> The plain idea of UPI is that it is publicly funded digital infrastructure

UPI is developed by NPCI which is a consortium of Indian banks (public and private), supported by RBI[0]. It is a not-for profit, but not publicly funded.

The fees are lower right now since they want to proliferate the use and get a monopoly over Visa/Mastercard. Once done, expect them to be at par. They just added some fees this march [1].

The distrust is not conspiracy theories but common sense when you observe how other entities have behaved previously.

[0] www.npci.org.in [1] https://www.thehindubusinessline.com/blexplainer/interchange...

alephnerd3 anni fa

> It is a not-for profit, but not publicly funded.

That's a bit disingenuous.

51-55% of NPCI's ownership is the RBI and PSU Banks (operated by Ministry of Finance) [0], so in reality it's a public private partnership between the Ministry of Finance and Private Sector banks.

A good comparison to the NPCI would probably be the Federal Reserve system in the US, but NPCI is a bit more autarkic.

[0] - https://www.npci.org.in/PDF/npci/corporate-governance/shareh...

sifar3 anni fa

I mean technically yes, but the reason I feel it is nothing to cheer about is if you understand how these public funded corporations work in India. They are mostly the worst of both worlds - you get a monopoly with lousy service.

For e.g the case of IRCTC which is the commercial arm of Indian railways and look at the insane price gouging that has been happening.

In the end, people end up over paying for sub-par products/services.

WeylandYutani3 anni fa

Visa/MasterCard is an extension of the American government.

I distrust them more than my local government.

theWreckluse3 anni fa

Can you please provide references/sources for the last statement.

sifar3 anni fa

Err ... more recent, not Indian but :) ... OpenAI. Basically almost any startup that was trying to acquire market share with VC money. Couple it with the Indian government's penchant for digital surveillance and you ignore it at your own peril.

To clarify, I am not saying UPI is not useful - it is to millions of people, but it is also not benign that it is made out to be.

padiyar833 anni fa

Thank you for bringing this clarity. And as an Indian citizen I am glad we took this step towards building an independent payments infrastructure, given how critical a payments clearance system is to the functioning of a modern economy.

I don't want other governments to hold us hostage through Visa's and Mastercard's where we are just one sanction away from economic meltdown. Just like what happened recently in Russia.

As a country we should be looking at securing other such critical support systems - Power control systems, Telecom hardware etc. That's the only way IMO to be truly independent!

villgax3 anni fa

In case you are not aware, UPI is basically a rebranded IMPS with Venmo style of address. Until UPI actually works internationally it is still a domestic payment system.

hestefisk3 anni fa

Singapore’s PayNow interfaces with UPI as well as PromptPay (Thailand). It’s only a matter of time before these payment rails get interconnected and SWIFT is history.

nooby123453 anni fa

Who built the IMPS?

villgax3 anni fa

Technically based off the same network as ATMs by IDRBT, https://en.m.wikipedia.org/wiki/Institute_for_Development_an...

Unified Payments Interface is built on top of IMPS, with the key architectural work done by the Mobile Payments Forum of India, IIT Madras and IDRBT

It is managed by the National Payments Corporation of India (NPCI) and is built upon the existing National Financial Switch network.

ta77893 anni fa

Absolutely, the US government has a long tradition of weaponizing US Dollar and SWIFT to cut off countries from global trade. This is a fact that has been happening ever since the petrodollar was invented. Governments all over the world, especially India, have realized this is a big vulnerability and a threat to their country's sovereignty. India, Brazil and several countries across the world have invested in their own infrastructure as they rightly should to keep their economic independence.

For those who don't know India has been on the receiving end of US sanctions for a variety of reasons. While the reasoning behind the sanctions has been long debated, it is plainly obvious from the Indian vantage point that economic independence is very critical for their survival.

realityking3 anni fa

> For those who don't know India has been on the receiving end of US sanctions for a variety of reasons.

According to wikipedia[0] there‘s only ever been two sanctions against India by the US. A short lived one from 98-99 because of a nuclear ban and a much longer one from 92-2011 related to the space program/missile development.

A quick search didn‘t turn up any current US sanctions either. Were there more sanctions or are you referring to these two?

alephnerd3 anni fa

There were recent (2019-2022) conversations about sanctions against India for buying S-400 missile launchpads [0]

This was dropped after a last minute amendment of CAASTA [1].

Though, if we're actually being honest, there was no real chance of sanctions actually being placed - it was just a negotiating ploy, and Indian Weapons manufacturers are increasingly working with American companies like GE and General Dynamics for IP transfers, though they lag behind Israel, France, and Russia in that market (FCPA's ability to pierce the corporate veil and an imo rightful aversion to IP transfers to generic competitors plays a big role in America's lag in the Indian defense market).

[0] - https://www.thehindu.com/news/international/us-discourages-i...

[1] - https://www.outlookindia.com/national/us-house-votes-for-caa...

ta_vf7xjd34cc3 anni fa

> A quick search didn‘t turn up any current US sanctions either.

The US and Indian governments have had bad relations for a long time. The US has the habit of weaponizing anything and everything. While not exactly sanctions, people don't forget things like PL480[1] that easily:

> Many of us still have hurtful memories of the mid-'60s when, after two successive years of savage drought, India desperately needed American wheat under the US Public Law 480 on rupee payment — and at relatively low prices because the country had no foreign exchange to buy food in the world market. Indira Gandhi had just become prime minister and chose to go to Washington on an official visit. Lyndon Johnson gave her a gushing welcome and responded to the food problem confronting her effusively, promising as many as 10 million tons of PL480 wheat. However, at an early stage the transaction turned sour.

> Infuriated by India's criticism of American bombings of Hanoi and Haiphong in the course of the Vietnam War, the irascible Texan put food shipments on such a tight leash that India literally lived from ship to mouth. With every morsel we swallowed a little humiliation. When told that the Indians were saying exactly the same thing as the UN Secretary-General and the Pope were, Johnson had retorted: "The Pope and the Secretary-General do not need our wheat."

[1] Swallowing the humiliation (http://archive.indianexpress.com/news/swallowing-the-humilia...)

pyuser5833 anni fa

Interesting. There are a lot of stories from the 1960s about us giving/trading food to India.

The US had a massive surplus, and was trying very hard not to destroy excess food.

They sent food to India, because the alternative was to let it go bad. And they would thank India for taking it.

But when diplomats realized this was happening, they tried to use it to extract concessions from India.

So India was being told “please take this food,” then “now that you’ve taken the food you owe us.”

India wasn’t exactly pure in this either.

India has been thankfully free of widespread famine since the British left. But internal controls created shortages, which were unnecessary.

India could have fed itself, but that was politically untenable, just as it was politically untenable for the US government to destroy food or stop paying farmers to overproduce.

jeff_d_miller3 anni fa

Domestic mismanagement in India can hardly be called a sanction by the U.S.

In other words, how would an independent financial system have helped India to put food on the table?

ta_vf7xjd34cc3 anni fa

> Domestic mismanagement in India can hardly be called a sanction by the U.S.

There is more to this.

The partition of India in 1947 divided Punjab in such a way that most of the fertile land went to Pakistan. Food shortages were soon a reality that would take decades to resolve.

There is also this theory that explains the partition of India in terms of the (then) looming Cold War. Creating Pakistan and supporting its claim on Kashmir prevented the USSR direct access to the Arabian Sea through Afghanistan and then India.[1][2][3]

> [Jinnah] was backed by British imperialists, notably Winston Churchill, who believed Pakistan would prove a faithful friend to the West and a bulwark between the Soviet Union and a socialist India.

> independent financial system

It is not a question of the financial system in particular, but of attitudes. The US has historically not shied away from using every available tool in order to achieve its geopolitical goals, be it finance or aid. But these actions cast long shadows that have to be dealt with generations after the people involved are long dead and buried.

[1] Who Is to Blame for Partition? Above All, Imperial Britain (https://www.nytimes.com/2017/08/18/opinion/india-pakistan-pa...)

[2] Partition through the looking glass (https://www.thehindubusinessline.com/opinion/partition-throu...)

[3] Baghdad Pact (https://en.wikipedia.org/wiki/Baghdad_Pact)

miohtama3 anni fa

The US has a tradition in messing with banking, but it’s not long. While sanctions have existed forever, weaponzing the banking system did not start until the last decade or two, when more power was given to FATF, and other non-elected international bodies led by the US.

SanjayMehta3 anni fa

The fact that it's public infrastructure and has no transaction fees is the source of much of the negative press.

Both Mastercard and Visa went complaining to the US govt about UPI and RuPay because they foresee their duopoly ending.

WeylandYutani3 anni fa

Yep Americans will tell you it is normal for a company to take 1-2% of every transaction. Don't believe their lies.

ta77893 anni fa

Correct. Public infrastructure can (but not usually is) run at a loss for the welfare of the citizens. That's the whole point of public infrastructure. MasterCard and Visa have been complaining for a _long_ time about this issue as it undercuts their profitability.

pyuser5833 anni fa

If they could, Mastercard and Visa would outlaw all currency except pennies.

pokepim3 anni fa

known3 anni fa

photochemsyn3 anni fa

(8)

new2yc3 anni fa

(2)

mkrishnan3 anni fa

(3)

rvz3 anni fa

A 'revolution' to on-board users and then airdrop them free money in order for the Reserve Bank of India to deploy their own CBDC on top of UPI. [0] [1]

Just like the catastrophic e-Naira and the widely adopted and dystopian digital Yuan this 'revolution' is all about CBDCs.

India is being a bit more clever in moving everyone in India on to their e-rupee CBDC and using the UPI hype and free money airdrops to do that.

[0] https://techmonitor.ai/policy/digital-economy/nobodys-using-...

[1] https://indianexpress.com/article/explained/what-is-e-rupi-d...

cuteboy193 anni fa

Although cbdc is a goal, the main purpose of UPI is simplified digital payments. UPI grew because of its technical superiority to existing methods, even regular people could see that difference. It's not because of incentives that it is so popular and most people never recieved them

rvz3 anni fa

So that governments can track, freeze and seize your funds at will or add savings limits to your account to get you to spend more and save less. [0] [1]

Once the government does something extremely unpopular, I will only see the same thing that happened with the trucker protesters with their bank accounts getting frozen which will happen in other countries for just protesting [2] and next time, CBDCs will play a significant role on who actually controls your money and they will do anything like banning the use of ATMs [3] to get you to use CBDCs.

[0] https://www.premiumtimesng.com/business/business-news/571691...

[1] https://reclaimthenet.org/digital-euro-spending-saving-limit...

[2] https://www.newsweek.com/banks-have-begun-freezing-accounts-...

[3] https://www.pymnts.com/cbdc/2022/nigeria-cuts-atm-cash-withd...

cuteboy193 anni fa

A court order in any country in the world will accomplish this goal. Bu itself upi has been a revolution. We need not think of farfetched conspiracies

rvz3 anni fa

> Bu itself upi has been a revolution. We need not think of farfetched conspiracies

Again. You are missing the forest for the trees.

I already substantiated the fact that a central bank has already banned the use of ATMs for the purpose of its users to be forced to adopt their CBDC. That is a fact, not a conspiracy, and there is no reason why this cannot happen in other countries that have finalized and are already deployed their own CBDCs, especially very authoritarian governments such as India or China.

The e-rupee is already being developed on UPI as E-RUPI which that IS a CBDC, controlled by the Reserve Bank of India. That isn't a conspiracy and you cannot convert it to cash either [0] as the point of it is to be totally cashless.

The end game of this 'revolution' is more about "control" than the technology and who really owns your money and what you can spend it on and how much you can save. More mass surveillance on top of savings limits isn't something to be celebrated.

[0] https://indianexpress.com/article/explained/what-is-e-rupi-d...

cuteboy193 anni fa

The problem is that the Indian government has already essentially full control. Americans enjoy more freedoms so maybe the conspiracies are justified. But the Indian government already has near total control in the financial sense. From an Indian perspective this is just pure convenience, since the control aspect is present regardless

rvz3 anni fa

> But the Indian government already has near total control in the financial sense. From an Indian perspective this is just pure convenience, since the control aspect is present regardless

That doesn't mean it cannot happen elsewhere (as I have already shown) which is my entire point.

Celebrating mass surveillance and total control of new digital currencies in the form of a CBDC and throwing free money into people bank accounts to pursue wider adoption, should scare us all and not celebrated, especially in the US, UK and other countries.

There will a point where governments will do worse things to discourage protests or donating to protest groups by using CBDCs against their own people even when they do something very unpopular.

Why on earth in the US should protestors be financially suffocated for simply protesting against their government if they did the same thing that happened in Canada with the truckers or in Nigeria with banning ATMs?