Unified Payments Interface (UPI) has transformed the digital payments landscape
Illustration: Chaitanya Dinesh Surpur
The more we know about how to do something, the harder it is to learn how to do it differently.” —Everett M Rogers, Diffusion of Innovations.
Aasa was fidgeting with her phone. We were sitting in a circle. The Self Help Group was sharing their experience with using mobile phones to do more than talk or watch videos. I was trying to learn what else were they using the phone for. Aasa quipped, “What else is there to do?”
It struck me that she did not see the phone as capable of doing much else. I could try and explain, but it would not help, she did not see it. The alternative modes in which technology could help her do what she wanted to do did not intersect with her daily life.
As we stare into our past through the James Webb Space Telescope, or into our future brimming with possibilities enabled by AI, a canvas comes alive, filled with innovations, big and small, mushrooming around us every day. Whether they succeed or fail, they stretch our limits and efforts to be different.
The outcome of innovation is not limited to the thrill of something new, something unique or a path never explored before; it is much more. It expands our ability to improve the lives of people, organisations, communities, society and our environment such that everyone can realise its benefits.
How do we ensure that innovation works for everyone, and not just a few of us? Should we assume that benefits will reach everyone over time? Should we draw solace that good ideas will eventually get adopted by more people, because they work for some? Are we investing enough to ensure that innovations are designed to serve diverse needs in diverse context? While snowflakes look the same from a distance, we know that no two snowflakes are ever alike.
If we believe that diversity poses challenges and is a complexity that must be dealt with, we may resort to training and educating everyone on how to use the innovation the way we have designed it to work. For a moment, can we consider how might we continue down the path of innovation to embrace, encourage and trigger more diversity rather than make efforts to contain and harness it? Let us pause for a moment and consider how the idea of modality may help.
Modality: A particular way in which something exists, is experienced or is done.
Unified Payments Interface (UPI) has transformed the digital payments landscape. Digital payments are forecast to constitute two out of three payment transactions by 2026.
How might we achieve this when estimates indicate that 20 percent of Indians may not even have a mobile connection and over 25,000 villages lack internet connectivity? Can UPI process payments for people with basic feature phones, without internet or even for people with no phones?
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It seems like a leap to think that digital payments could be completed without a smartphone or the internet. By innovating for modality, UPI meets users where they are, in their context. While the solutions have emerged in phases, a unified design that works in all modes was conceived from the start. It was architected to encourage diversity.
Smartphones with internet: For a professional in Bengaluru who uses internet-enabled smartphones, she can make UPI payments even while stuck in traffic jams or in the middle of a movie. She uses UPI through apps of her bank or through third-party apps like GooglePay, PhonePe, Paytm, MobiKwik, AmazonPay, SamsungPay, or WhatsApp Pay. Both phones have to be synchronously available for this mode to work.
No internet: With unreliable connectivity in many college campuses, a student may find buying snacks at the college canteen cumbersome, if not for UPI Lite. UPI Lite is an on-device wallet that can scan QR codes without the need of an internet connection. UPI Lite processes the debit transactions offline while the credit happens when the device goes online. In the future, UPI would be able to complete both credit and debit transactions asynchronously in an offline mode.
No smartphone: It is estimated that ~38 percent of Indians, ~400 million, have a feature phone and not a smartphone. They can also use UPI. Used widely in the rural areas, ‘UPI123Pay’ lets a farmer use a feature phone for almost all transactions, except ‘scan and pay’. It doesn’t even require an internet connection. UPI123PAY can work in many ways.
Give a missed call to a dedicated number, receive an authentication call to ask for PIN verification and complete the transaction. Call an IVRS (Interactive Voice Response System) and the payment gets completed using predefined phone numbers. Make payment through sound-based proximity data, where high-frequency ultrasound waves transfer data between mobile phones that are next to each other.
No phone: It may be hard to believe that only about half of 724,115 women interviewed by the National Family Health Survey of India said they had a mobile phone that they use exclusively. So how would a housewife who doesn’t have access to a phone use UPI? For her, UPI authenticates transactions using a scan of her fingerprints linked to her Aadhaar.
UPI’s own biometric authentication interacts safely and seamlessly with Aadhaar’s central biometric repository, which can verify her as a valid user and provide approval for/decline the transactions. UPI is designed to perform in her modality.
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Today, India is leading the innovations in digital payments globally, with over 40 percent of payment transactions being digital. Enabled by the innovation modality of UPI, online payment portals, voice-based payments and biometric identification are extending the benefits of a cashless economy to everyone.
Can we reimagine how to improve access to health care under various modalities? How can we help improve livelihoods across the diverse modalities of rural India? How can we design multi-modal access to education in government schools spanning our socioeconomic and geographical diversity?
As innovations like UPI discovered, at population scale, diversity is not a challenge—it is the solution. Designing for all modalities from the start offers the way forward for innovators to develop their ability to sense, make sense and act on opportunities that generate long-lasting value for everyone, in any context, at population scale. Can we ensure Aasa benefits from every innovation in her modality?
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(This story appears in the 24 February, 2023 issue of Forbes India. To visit our Archives, click here.)