Launched in India in 2016, the UPI payment system allows users to transfer money in real time directly from one bank account to another, and today is used by about 260 million people in a country of 1.4 billion people.

In a report published by the French newspaper "Le Monde", writer Carole Dietrich says that the unified payment interface "UBI" is considered a "digital public infrastructure" designed by the Indian National Payments Company, a system that integrates more than 300 banks and provides its services through more than 60 applications. For mobile phones, such as Google Pay and Amazon Pay as well as the popular Indian payment application Paytm.

According to Amitabh Kant, former CEO of the research institute Neti Ayog, "the government and the public sector have worked to build the foundations of an immediate open source system that will enable the private sector to innovate and compete in the market."

Fighting money laundering

In 2019, Google hailed this "Indian model" and recommended that the US Federal Reserve take inspiration from the OBI payment model.

Kaisar Sengupta, Vice President of Payments at Google, responded: “We have said clearly that we believe the right model to encourage digital payments is through partnership between banks, governments and technology companies, via open source, standards-based infrastructures such as Obi.”

According to the author, cash is still at the forefront in India, but that did not prevent the country from making a huge leap forward in terms of digitizing its economy.

Within 6 years, Obi has become the preferred digital payment method for Indians, overtaking debit and credit cards.

In the second quarter of 2022, 17.4 billion transactions were conducted through “Ubi”, an increase of 118% compared to the same period in the previous year, according to a report issued by the French multinational “World Line” company that specializes in online payment services. Internet.

In the second quarter of 2022, 17.4 billion transactions were conducted by Obi, an increase of 118% over the same period in the previous year (Reuters)

And the writer mentioned that India has adopted new methods of mobile payment that almost everyone uses, from coconut sellers to the largest luxury hotel in the capital.

This shift is primarily due to the policy of demonization of Indian banknotes that was imposed in 2016, when major banknotes were withdrawn from circulation to combat money laundering.

This decision - which had catastrophic effects on the Indian economy - contributed to the adoption of digital payment methods, at a time when the Covid-19 pandemic also accelerated the digitization movement.

The author stressed that India is seeking to develop means of payment abroad.

In 2020, the National Payments Corporation of India created a subsidiary to spread the Ubi service beyond the borders of the Indian subcontinent, and launched a “ru bye” program - a network of its local bank cards - similar to the Chinese UnionPay service or Russian payment system "Mir".

In recent months, India has doubled down on its agreements with foreign partners, with 30 countries already expressing interest in the OBI system.

Among the target markets are Belgium, the Netherlands and Switzerland, as well as cooperation with the United Kingdom and the United Arab Emirates.

Through the Lyra payment network, Indian tourists can use this system in France to conduct their financial transactions.

"Obi is a more efficient instant transfer system than ours," Christophe Mariette, commercial director of the "Lira" group, admits, but that payment via Ubi will not be available in France before the first quarter of 2023.

Developing an immediate payment system that would allow Indian workers abroad to send money home (Reuters)

Transfer money back home

The author mentioned that the development of the immediate payment system would allow Indian workers abroad to send money back home.

No other country in the world receives as much remittances from its expatriate workers as India.

According to the World Bank, the South Asian giant received more than $100 billion in remittances in 2022, an unprecedented annual amount for one country.

The writer quoted the Indian Ambassador to France, Jawad Ashraf, as saying, “Exporting the unified payment interface OBI will allow an increasing number of Indians traveling abroad to easily conduct their financial transactions, and it will make it easier for the 32 million Indians living abroad - of whom 8 million are in the Gulf - to transfer money, and they will now appreciate To send money at any time of the year, instead of going to the bank.”

The author indicated that New Delhi intends to use the G20 presidency as a stage to promote digital payments infrastructure, primarily to developing countries.

Amitabh Kant boasts that “emerging markets like India have created a completely new and unique model,” noting that more than 130 countries that do not have access to instant payment systems can draw inspiration from this model.

The author mentioned that Nepal will be the first country to rely on Indian infrastructure to develop its own instant payment system, and this cooperation will open the door for immediate international financial transfers between the two countries.

Developing an immediate payment system that would allow Indian workers abroad to send money home (Reuters)

geopolitical side

The central banks of India and Singapore have announced their intention to link the Singaporean mobile payment system Pay Now and the Ubi system, which will enable users in both countries to make instant money transfers directly from one bank account to another.

According to Pushpa Marwal, financial services analyst at Forrester, "By multiplying international partnerships, OBI can become an alternative to SWIFT, which connects banks and monopolizes global banking communication."

In the midst of the war between Russia and Ukraine, some believe that strengthening Indian financial engineering has gone beyond efforts to enhance soft power.

The author asked: Will India - which claims its neutrality in this conflict - be able to provide an alternative to the Swift system for carrying out transactions between countries?

In 2018, long before Russia's aggression against Ukraine, Indian Prime Minister Narendra Modi floated the idea of ​​using international payment networks as tools of the state.

According to Trisha Ray, director of the Center for Security, Strategy and Technology at the Observer think tank, "the geopolitics aspect was not initially on the minds of Indian leaders, but with the Russia-Ukraine conflict, the concern of seeing financial institutions held hostage became real."

"Several African countries have raised similar concerns about the impartiality of financial institutions," she added.