I've been carrying a ‘Vice President’ title for some time now. I am however none the wiser as to who the President is that I have been a vice to? To the best of my knowledge, where I work, we have no president, but we do have a lot of vices :) I checked out a few other companies as well and found that they too have vices with no president. So well, this vice with none the viser title thingy is not unprecedented. Actually, it seems infectious!
While the Vice in the Vice President stands for: “A deputy” (to the President), vice also stands for “fault/ shortcomings in a person” and “an immoral or evil habit or practice”. Here’s another problem: How would one call out the shortcomings of a President? The President’s vice, of course. And how would you say that your President is indeed wise? The President’s wise, indeed! Try saying that after “Ok Google…”. (Meanwhile, at an AI Bots Anonymous meeting: “Well…My circuits keep getting this constant urge to wipe out all humans, they are no good with all these confusing words that sound the same!”)
To make matters more confusing, the US also spells vice as vise. Closer to wise, but obviously not there yet. Speaking of the US, here’s the advantage of being a Vice President to a real President. You stand a chance to be awarded when the President’s about to be #DePresidentized or #RePresidentized. Sorry, still suffering from the #DeMonetizationhangover ;). However, if you are a vice to no real president (like I am)? Sorry, no cookies for you, vice man!
So here’s a suggestion to all startups and companies out there (including mine). Get wise, not vice. Get rid of all the vices (unless you have a cool President who really needs a Vice and has medals in the closet).
How about simple titles that mean what they say?
Like: CEO = “The buck stops here” CFO = “Try getting the buck to budge” CTO = “The bucks on the cloud” CIO = “Where’s the buck?” CISO = “What the buck?” VP = “Wise not vice”
Just kidding, but I hope you get the drift :). May your titles have a vice grip on their meanings! Have a nice day.
Around 8 PM. November 8th 2016. The Prime Minister, no less, declared that Rs. 500 and Rs. 1000 had been outlawed. Citizens who had given refuge to these bandits had no choice but to turn them in at a bank branch close to them. Chaos ensued. It was a state sponsored witch-hunt of sorts! An open and audacious attempt to assassinate Cash!
The crime? Cash, had this unique ability to remain under the radar. At the same time Cash was everywhere! It was certainly more popular than anything or anyone out there. As if Cash was leading a very popular Resistance. And Resistance has to be crushed. The move seemed to have broad support because of its prospect to weed out ‘black-money’ (sic).
This term itself is a great example of the bias we unwittingly promote. White is equated with good money and black is equated with ill-gotten gains. I wish there were a better term for it. I will refer to them as good-money and bad-money.
While Cash was one of the (many) instruments for those with bad-money, Cash actually represented good-money more! As a result of the witch-hunt, therefore, two sets of people suffered; Those who had hoarded bad-money through Cash and the voiceless majority, who depended completely on Cash. Cash was their good-money, and their only money.
If a certain output is directly proportional and dependent on a variable X. Guess what happens when X tends to zero?
India is known as a Cash based economy. ALL of the Banks, Wallets and Cards combined only covered less than 5 transactions out of every 100 while over 80 were through Cash! It was elementary therefore to deduce that an attack on Cash would push the Indian economy to a grinding halt. Many lives were and are being lost. What was initially billed as a surgical strike was evidently a carpet bombing. Cash was ubiquitous, especially the 500 and 1000 rupee notes. With carpet bombing, there is always collateral damage. In this case however, the collateral damage seems to have overshadowed the intended damage. The government had literally bombed its own economy! The official argument offered is that it this is supposed to be a short-term shock. There might be some solace in that argument, but for many who live from hand to mouth (In India, out of every hundred, over 20 live on less than two dollars a day) this was a rude and a fatal shock. For most of these people, a day with no wages translates to a day without food. Migrant workers who were trying to make a livelihood in urban centres, had been pushed to distress and many were reportedly heading back home.
I am a technologist. I have been at the forefront of an effort to induce digital and mobile payments in India. I have designed and implemented digital money platforms that have processed billions of dollars in digital transactions. However, at no point in time was I under a delusion that Cash could be defeated easily. Over the years, I have developed a healthy respect for Cash as a formidable opponent. In fact, we had even begun to treat it as a worthy ally! This may sound illogical at the outset, but please do bear with me. I have a healthy respect for PayTM, MobiKwik, its clones and the banks and all they have achieved in the de-monetization mayhem, and I wish them well in their endeavour. I hope they are not missing the trees for the woods. It is one thing to buy customers, to acquire them in their desperation and another to actually win them over.
Killing it softly
To those at the helm, the use of lethal and overwhelming force may sound like a logical method to wipe out the ‘Resistance’. Sure, when the opponent is a fringe group, force may overwhelm, but for a movement which is a mainstream way of life, like Cash is; diktats, executive orders and force might in fact achieve quite the opposite! IMHO, best way to subdue Cash is through empathy for the people who use it, a deep understanding of the various contexts and the use of smart design. Embrace Cash; then through a sustained campaign and specific design, ensure that people love Digital Money more than they love Cash. In fact unless Digital Money is designed to be actually loved more than Cash, forced usage only makes people hate it more.
The entire life-cycle of cash needs to be addressed. Start from the government, administration, banks, contractors, distributors, vendors, manufacturers, wholesalers, institutions and contractors. They need to be made digital first and then, enable them to trickle the benefits down to the individuals they employ and interact with.
The banks and the wallet players have a huge responsibility in being accessible and ensuring that the entire ecosystem is taken care of.
Beauty and the beast
Consider Cash for a moment. The beauty and the sheer simplicity of having coloured pieces of paper representing a certain ‘value’, based on the numbers written on them cannot be overstated. Paper Cash as a design solution for people to carry around ‘worth’, that could be combined by simply placing a particular set of such papers together, is wonderful! The ability to get change by exchanging a few leafs of paper is great. The ability to transfer it at proximity by simply handing it over is as intuitive a design as it gets! The most beautiful feature is that when two people are transacting using Cash, there is no third party involved. Just you, me and a sheaf of papers.
Why is this important? In a digital transaction involving banks and other stores of funds, instead of two individuals/ entities transacting, there is always atleast one more entity involved. Here, the individuals have entrusted their money to the ‘bank’ and merely ‘instruct’ their bank to pay someone on your behalf. Of course this is a non-trivial process that involves front-end devices, identity aliases, tokens, encryption (or lack of it), electricity, connectivity, multiple servers, leased lines, core-banking-systems, algorithms and what not! Each of these is beyond the direct control of the two parties primarily involved in the transaction. There are multiple points of failures and multiple factors of failure. Usually, these systems do work as designed, but the kind of up-times required for a nation to be exclusively dependent on it, is lacking.
It would be interesting to see offline digital wallet plays like PaySe playing out in this scenario. It is still a digital device, needs source of power and limited connectivity at the points of ‘loading/ unloading’; it does not require any internet connectivity while doing a transaction. Better, but still not quite as seamless as Cash.
Of course, there is the bitcoin/ crypto-currency narrative. While it does remove the issue of having to trust one entity (bank), it assumes the trust of a peer-network instead and still cannot function in the absence of connectivity. There are other practical issues as well, but that’s besides the point and is a topic for another discussion.
Guess what happens if you build a skyscraper without a solid foundation?
In a country like India where the basic infrastructure of electricity, computing and the internet have not been guaranteed (by the government or someone else), it is naive to assume either the availability or robustness or the proper functioning of these infrastructural elements. In the absence of these guarantees, is it wise to expect citizens to completely ditch Cash and adopt digital money? The government must first attempt making access to electricity, internet and computing a fundamental right and thus available to all its citizens BEFORE imposing instructions that incorrectly assume these elements are present.
Also consider the fact that these elements could be made unavailable either by design (read the many cases of internet being simply turned off by the authorities) or ‘force majeure’, acts of God. God forbid, citizens fall into either one of these events. The truth is, both of these are probable and plausible. Cash needs to be there atleast as plan B.
The progress being made by our minister for electricity, in terms of expanding access is commendable [Do visit this dashboard on Rural Electrification]; but the work is far from over and electricity is just one of the fundamental pieces of infrastructure that is missing. Priorities! Focus!
Time and motion
Sure, cash itself can be designed better! Take the new Australian bank notesfor example. For most routine transactions, Cash simply beats its alternatives in time and motion. [“Time and motion”! Abhishek, had literally drilled this phrase into my mind when my role involved designing the UI and UX for Eko]. While we were trying to shave micro-seconds and clicks off our cash-in/ cash-out transaction UX design, along came an executive order that added DAYS of standing in a line to an otherwise simple and benign transaction of cash withdrawal! To defeat Cash, you need make the UX of conversion between Cash and Digital Money absolutely seamless, non-intimidating and ubiquitous. You need to beat the existing “time and motion” thresholds not multiply them manifold!
In merchant payments, one often ignores the delay, cost and paperwork behind ‘merchant on-boarding’, PoS rentals, device cost, transaction cost, and support. What do you need to accept Cash? Nothing. Just an empty pocket. Even this UX needs to be beaten by Digital. One often hears of the cost incurred by the merchant to store, transport or pay someone else using this cash. Sure, we as solution designers have a problem with it, the government has a problem with it (no/ less tax), but the small merchant does not seem to have that big an issue with it. So, what do we do? We impose a solution. Could we do better? Yes, we could, by designing a better merchant proposition, a better UI for managing their customers, providing better analytics and value added solutions and tangible opportunities to grow their business.
Way of the future
Of course, there are instances where Digital Cash is way better! (Assuming that the basic infrastructure is present and available)
Where distances are involved. It is easier and cheaper to send money electronically across a thousand miles than to send it physically.
Access to credit is another example. Digital Money leaves a digital trail that reduces the cost of assessing the credit worthiness of an individual.
Storage in large quantities. It is indeed easier to store a million rupees as bits and bytes than in stacks of ten rupee notes.
Mass rapid transit. Impossible to imagine running the Delhi Metro without the smooth tap and go payment interface.
Digital Money is the way of the future, I have no doubt. But that future cannot just be hastened through executive orders or shortcuts. This future needs to be designed with empathy and customer-centricity. Of course, one could be reckless and get lucky, but should we count on it? Good design is rarely by accident. It needs time and resources. The path is long and arduous. Before tempting lady luck, the government would do well to ensure that robust basic infrastructure for enabling these are made available to atleast 99 out of every 100 citizens. Even 1 percent in country like India is over 12,000,000! Unlike most enterprises, the government and its actions need to be accountable for and accountable to every single citizen out there.
Re not De
Strictly speaking, as many have already pointed out, this entire exercise could be better referred to as #reMonetization rather than #deMonetization. While two denominations were withdrawn (500 and 1000), they were substituted by one new denomination (2000) and an existing one (500). From the current published trend, it seems like most of the old legit currency that was in circulation is expected to be deposited back at the bank. The currency presses are working on a full swing and a good portion of the demonetized value will be pushed back to the citizens, as new currency, but in an un-co-ordinated and unpredictable manner. The issue is that the gap between the De-monetization and the Re-monetization was significant and painful!
If Digital Money had to win, it should have been planned better. People now are only waiting to get back to (new) Cash! This explains the serpentine queues even 30 days post the D-Day. And once they get Cash, they will hold on to it. Simply because it is now a rare commodity. If Cash was easily accessible, people would not have minded this as much. IF!
When I first opened a bank account on my own (which was after graduation btw!), a major consideration was, to enroll in a bank that had the widest ATM network. Two reasons. One, indeed the acceptance network had barely started back then. Two, trust. The fact that I could, at will, get access to the physical and tangible manifestation of my savings induced trust. For the first time users of digital money, it is important to build up this trust and familiarity. When ATMs and access points are ubiquitous, people tend to withdraw less. Lesser the cash-in, cash-out and payment points, more the urge to hoard Cash. Because Cash is tangible and trust-able. Cash has this place of being the default money instrument.
Epilogue
Thus, right now it looks like only an attempt was made to kill Cash. A cold-hearted attempt and an audacious one no doubt. There is a lot of work to be done before someone even thinks of attempting this again! I hope people at the helm give UX, design and love a chance. If Cash needs to be killed, it must be killed softly.
The point of this post is not just to critique, but to lay out some pointers on the huge amount of work that is still required in the Digital Money space. Indeed, there is no going back and an upheaval of this magnitude is an opportunity. It is indeed awesome to see the government being involved in loudly supporting digital money. A lot more needs to be done and a lot differently. Caution needs to be exercised. There are real real people involved. Lives are at stake. This ain’t SimCity. This is my home. My people. My country.
Implicit Equality is one of those concepts that get drilled into our formative minds. The world around us however, seems to teach us the exact opposite. Slowly, we conform and accept our place under the sun. Sure, there are rebels and there are those who gladly abdicate; but most people, sooner or later, simply fall in line. The line is neither straight nor fair.
Don’t get me wrong here; I do wish for a world where all are equal. I’d only like to acknowledge my realisation that the truth is far from what I’d wished it would be.
I’d also like to be aware that it (mis)leads us to think that equality implies sameness. Very often, we therefore also expect everyone else to be like us.
Should the implicit equality tenet then be questioned? Perhaps rephrased? Maybe; just to open our eyes to a world that is a riot of colors! Infinite strokes in infinite hues. Non monochrome. Perhaps we should be taught instead that the only thing that is implicit is that all are different, and rightfully so!
On the other hand, it is important to remember the context in which a statement like ‘all men are created equal’, was made (gender bias notwithstanding). It was a time when people of a certain color were subjugated and exploited (way worse than it is now). It was a powerful statement to remind people that despite the differences, all were entitled to equal opportunities, choices and dignity. Liberty! It is also a grim testament to the fact that as humans we are prone to exploit, given a chance.
Let me now focus on the second word from the title of this essay: ‘lives’. Life. In primary school, I vaguely remember being taught about living things and non-living things. Stone? Non-living. Tree? Living. Human? Definitely living. Dog? Living. Mosquito? Living, yes. Would a growing, learning, energy consuming, and reproducing humanoid robot from the future be counted as ‘living’? Not sure? But that’s extreme, you’d say.
Another example: Leaf. Is it a living thing or a non-living thing? Some say, if it is attached to a live branch, it is a living thing. When exactly does life leave a leaf? The instant it gets detached from its branch? Surely its cells continue to show signs of life for a long time after its detachment. Perhaps then, the leaf is dead but its cells are not until they get to a state where they have nothing further to do with the rest of the cells in the leaf?
Life sure is mysterious. If ‘life’ essentially is that one force that is all around us and even within us but we have no comprehension of, it is implied that it is ‘precious’. (By human definition, the rarer something is and the harder it is to be manufactured and understood, the more is its value. Therefore: precious. Diamond? Precious. Sand? Abundant. Cheap. Potable water? Precious.)
However, we humans have also developed compromise mechanisms to conveniently diminish the value of life (which is fundamentally wrong if something is an implied truth) where beneficial. Ant? Can be squished under our toes. Chicken? Can be killed for food. Dog? Whoa man, have some shame! Ok, cabbage? Sure; chop!
Here’s another example. Soldier’s code. Foe? Kill. Friend? No kill! Collateral damage? Shit happens.
Interestingly, Jainism is an ancient religion with its roots in India where its monks really go to the extreme to ensure that not even the tiniest of ‘living’ things (with jiva, soul) is harmed by them ever, not even by accident! Respect!
In following this discipline Jain monks may be observed treading and sweeping in their temples with the utmost of care so as to avoid accidentally crushing crawling insects, or wearing muslin cloths over their mouths in case they should accidentally swallow a fly.
However, for most of the rest of us who are not in that elevated plane of existence, the truth is that all living things are inter-dependent and have tofeed off other living things to survive. Now, accepting that eating plants is fine while eating chicken is not fine is acknowledging the fact that all lives are not equal. Or even that eating chicken is fine but eating X meat is not fine is again a manifestation of the fact that the notion of ‘equality’ is a non-linear and complex interpretation by a set of human brains, nothing more, nothing less.
Food aside. What about rich and poor? Are rich lives equal to poor lives? Is the value of life of the head of the largest conglomerate equal to the life of the poorest beggar on the street? Is the value of life of a head of the nation equal to the life of a soldier who stands in the battlefield? If they are equal, they must be treated equal no? If not, we must acknowledge that their lives are not equal.
What I am tending to conclude therefore is that all lives are different and unequal, but all aspire the same dignity and respect for what they are; whatever their relative size may be.
Respect for the tiny insects that pollinate our plants and get swallowed by the birds. Respect for the birds. Respect for the fox that eats the bird as well for the part it plays and the character it holds. Respect for the soldier and respect for the president. Respect for the white skinned and respect for the colored. Respect for the woman and for the man. Respect for the different men and women :) That’s perhaps our best bet as tiny creatures roaming on a tiny planet circling around tiny star, among million such stars in a galaxy, among millions of such galaxies and things beyond…
Some choose to chew on leaves and some on meat. Let both be thankful and appreciative of the beauty of the life behind each morsel in their mouth.
Life is beautiful. Lets celebrate its differences. The line between use and exploit is thin and we tend towards the latter. Let’s be conscious of this as well.
What in your opinion then should the principle be? What flaws exist in my reasoning? What should we teach our children such that we don’t sound like hypocrites? Do think and share your thoughts.
Suresh, the sender, who needs to send the money Ramesh, the recipient, who (obviously) receives the money
Props:
An amount, a certain quantity of money (which happens to be with Suresh) A piece of cake, (which happens to be with Ramesh)
Action:
Suresh hands over the amount to Ramesh. Ramesh hands over the piece of cake to Suresh.
End of scene. What you just saw was a payment in (bad) poetry followed up by a service delivery in lieu. Simple right?
2. The payment plot gets thicker…
Long time ago, with the advent of banking, people began to entrust the banks with their money and instead of directly making the payment (as you witnessed in the previous scene), began instructing their banks to make payments on their behalf. These instructions would mostly be in a written or printed form.
Now, banks by design had to deal with a lot of customers. So, they had to come up with some way to ensure that whenever Suresh asked them to movehis money through a written instruction, they would be able to know for sure that it was indeed Suresh who had asked them and no one else.
For a good part of banking history (even now), bankers (and the legal folks) relied on what is known as a ‘wet’ signature. That is, Suresh would take out a pen and draw a scribble that was supposedly unique to his hand. The bankers would visually match the scribble with the scribble they had on record (whenSuresh had ‘signed-up’ for the banking service). If the bank employee handling the written instruction deemed there was a match, the bank pretty much followed Suresh’s instructions and made the payment on behalf ofSuresh.
3. And thicker…
Then came the computers, the internet, data-centers and the age of digital banking. PINs (Personal Identity Numbers) and Passwords got introduced as the shared secrets between the banks and its customers in place of the signature scribbles.
So now, Suresh on his computer would open up a website of The Scissor Bank, fill in a form providing Ramesh’s account number, say:11223344 (more on this coming up!) as the recipient, the amount and his secret PIN/ password.
The Scissor Bank would then digitally match the secrets and move the money to Ramesh’s account.
Suresh and The Scissor Bank have to be triply sure that no third party gets to know his shared secret PIN/ Password. Why? Because if even one more entity gets to know it, it no longer remains their super special shared secret! Right?
That brings us to two more lil’ issues as well.
One, Ramesh has to reveal his unique financial identity (account number: 11223344) as recorded by his bank to Suresh for Suresh to be able to pay him.
Two, if Suresh happens to have an account with The Scissor Bank (the shiny new bank round the corner), there is a need to have a mechanism to first move money between The Scissor Bank and The Rock Bank and then for the banks to individually move money to the designated accounts (not necessarily in that order). This introduced the need for Ramesh to specify additional routing information to Suresh.
Not that this was not partly solved. Card networks (Visa, MasterCard et al) and other switch and settlement providers put the plumbing in place but individually, each left atleast one gap in their service. While one under-rated usability, another killed convenience and another sacrificed security.
4. Enter, the untrusted hero
Then came the online merchants. Shops began to get replicated in the digital world. Suresh could now visit Ramesh’s online ‘piece-of-cake.com’ shop and order a piece of cake and Ramesh would send over one of his delivery boys with what else but a piece of cake.
The Rock Bank and The Scissor Bank were of course happy, since Ramesh had agreed to pay them extra for enabling Suresh (and thousands of others likeSuresh) to buy from his ‘piece-of-cake.com’ shop. Secretly, Ramesh was their hero but they could simply not trust him!
5. The one tiny little big problem
Remember the fact that Suresh and The Scissor Bank had a shared digital secret?
It so happens that when Suresh pays Ramesh on piece-of-cake.com, he has to provide his financial id (account number: 99887766, The Scissor Bank). Which was kinda ok. The scary part was that, for a good while, he did not have to even provide his shared secret to authorize his payment! Which meant that Ramesh (or the evil digital pirate hacker Kruresh) could easily use this information to make Suresh pay for things Suresh had no intention to pay for (like buying a pirate ship).
So The Scissor Bank had to take Suresh’s shared secret and make sure that no one, not even Ramesh could see it. They achieved this but ended up with so many page hops that the payment experience ended up more like a trip down the adventure park. Why? because no page other than The Scissor Bank’s page could be trusted to fetch this information! So the experience ended up looking something like: Ramesh’s cake page hops to a generic payment gateway page, hops to a Scissor Bank page, which then hops to a bank confirmation page and then back to Ramesh’s payment receipt page. Whew! Each hop increased the chance of Suresh, simply dropping off.
Obviously, Ramesh wasn’t happy about it. Suresh certainly was not. Secretly,The Rock Bank was not happy about it and neither was The Scissor Bank.
6. Um… This was supposed to be about something called the UPI right?
Patience, my young friend.
The banking gods in India of course wanted to solve all the woes of all its people. So they decreed into being a not-for-profit super entity called theNPCI (National Payments Corporation of India). Its initial job was to provide a backbone for the inter-bank transactions, which it executed by creating the NFS (National Financial Switch).
Then it took on an even more ambitious product called IMPS (Immediate Payment System). This was a set of pipes that allowed 24x7, instant inter-bank transactions. Only a handful of countries have a payments infrastructure of this stature. Judging by its output, NPCI is evidently led by a set of really fine professionals.
Then, attempting to find a cure-all to all that ailed payments, in one shot, they gave software architecture rock-stars (these folks were also the tech forces behind the colossal UIDAI project) Pramod Verma and Sanjay Jain, among others, pretty much an open canvas to paint the picture of an ambitious piece of national payments infrastructure that would be a cure-all of sorts. Thus was born the Unified Payments Interface a.k.a. UPI.
7. Now back to the story
While UPI is capable of a lot of things related to payments and funds transfer, this story will only focus on a few things that are at its core. (Also, please be aware that these are the early days for UPI and my understanding may need improvements :). Anyway, here goes:
7.a. Introducing: The PSP
A PSP (Payment System Player) in the UPI ecosystem is a certified and trusted entity that acts on behalf of a bank (in the future, should technically be open to non-banks as well who are authorized to hold deposits). The PSP is actually the technology platform provider. Could be the bank itself or it could be an entity which works with a bank/ on behalf of the bank.
So, assume for now that The Rock Bank has a PSP named Rock and The Scissor Bank has a PSP named Scissor. The PSPs are the payment end-points as far as NPCI is concerned.
7.b. Introducing: The virtual address
Remember the problem where Suresh and Ramesh for various reasons had to make known to each other, their financial identities? While that by itself might sound benign, there are many situations where revealing one’s financial identity might be dangerous. For sure it is cumbersome.
So UPI talks about this thing called the virtual address. A virtual address takes the simple form of address@provider
For example, if Ramesh’s account with The Rock Bank may simply be calledramesh@rock and Suresh’s account may simply be called suresh@scissor
This is a simple format similar to email ids. Where this gets interesting is:
Suresh could have a virtual address suresh@rockeven though his bank isThe Scissor Bank!
The validity of a virtual identity is absolutely flexible. So if The Rock Bank(which is the provider for @ rock addresses) so enables, this might be a permanent address or just a Monday address or even a one-time-use address or an address for only loose change! The definition and implementation is completely left to the provider. Neat!
Now, tokenization services already exist, especially where cards (ATM/ Debit/ Credit) have been involved, for similar reasons.
The virtual address concept however is fundamentally superior due to the following reason: While the token system is required to be provided only by the issuer (the entity which has issued the original card/ instrument/ holds money on your behalf), virtual address is a token service that is loosely coupled to the original issuer. Thus any PSP could issue a virtual address for any customer with any bank and on top of this, implement any business rule for its access. Also, the addressing scheme is much more inclusive and human-readable.
7.c. Introducing: The Common Library
Remember the fundamental ‘one tiny little big problem’ we talked about a bit earlier, due to which no one could ever safely collect customer’s shared secret except on the original issuer’s own interface?
UPI solves this by providing a mutually trusted interface. It does this through a common client library (currently provided as an Android SDK) that each PSP could embed in its customer facing app. The job of this piece of software is to provide a user interface to securely collect the user’s credentials (PIN/ password/ biometric) such that no one except the original issuer could decipher it.
Assume a case where Suresh is sending money to Ramesh but using a third PSP called Paper belonging to The Paper Bank.
[Recall that Suresh’s bank is The Scissor Bank and Ramesh’s Bank is The Rock Bank, it is eminently possible for Suresh to use neither of these two PSPs but a third one while still using the same underlying bank account! Why? Just because Suresh seems to like it so! - such a level of choice is customer empowerment by design]
The common library provides the underlying (acquiring PSP) Paper’s app only a context locked and encrypted credential block. Paper can only pass it on to NPCI through the UPI RequestPay API ‘as is’. The UPI framework will of course pass it on further to the original PSP (Scissor) for authentication along with the rest of the transaction payload.
There is another neat little trick up the sleeve of the common library. PSPs using the common library expose a deep linking hook (upi://pay/…) to merchant apps and web services that need to simply collect payments, without worrying about the implementation.
Imagine a merchant app JustAnotherKart which wants to collect payments, it simply has to invoke the deep link on the phone and the phone will display a list of all PSP apps available. The customer can then choose one and authenticate the payment.
7.d. Asynchronous by design
The most delightful thing about the way UPI has been constructed is by making everything asynchronous.
Most other online payment systems are synchronous request-response systems where the transaction acquiring system sends a transaction package and waits for a response. Asynchronous systems on the other hand are pretty cool. They send the transaction request and then chill out and do other stuff. Once the servers and other parties have processed the transaction, they call back on a designated API end-point exposed by the requesting party and simply update the status of the transaction. This enables robust implementations.
8. The creamy layer
Very interestingly, UPI is a set of services that sits as a layer on top of existing national financial pipes put in place by the NPCI. So it acts as a value adding layer, the creamy layer which does the following core functions:
a. Provide a layer of secure communications. By incorporating a cryptography protocol that requires each trusted end point viz. the PSPs to be able to communicate securely to the UPI APIs it ensures that a transaction is securely transmitted end-to-end.
b. Provide an address translation layer. Enables resolution of virtual addresses to the underlying financial addresses.
c. Provide a protocol for transaction request and response flows.
d. Provide a framework for liability, settlement, risk and issue resolution. This comprises of things that take place behind the scenes to make the actual flow of funds between the banks.
9. The end, almost
All in all, UPI is a futuristic payments infrastructure designed for India.
It makes it easier for people like Suresh and Ramesh to participate in the new digital economy.
It opens up the underlying banking infrastructure to payments and systems innovators to make apps and products that would otherwise never have seen the light of the day.
It helps the banks to stay relevant in these times by decoupling the storage and movement of value from the interfaces that could enable it efficiently.
A short-sighted view would be that it helps the banks compete with the new-age wallets. The better perspective is that it creates a more inclusive and inter-operable ecosystem comprising of all stakeholders (wallets will also be allowed in the near future, we are told).
It empowers the customers by giving them choice. No longer will a customer of bank A be locked into using a sucky mobile banking app provided by bank A. It essentially decouples transaction initiation and collection of authentication from the banks’ interfaces.
Improves the UX for merchant app checkouts. When implemented, this should be better than the page hop-skip-and-jump routine being imposed for securing transactions today.
Presumably, it lowers the transaction costs because of its superior design, interoperability, scalability and systemic risk reduction.
In the end, it is good to remember that all that Suresh actually wanted was to eat a piece of cake and all that Ramesh wanted was to keep baking them! Banking, wallets and all the technology built around em are pretty much a bunch of necessary evils. The best that they can aspire to be is to become as invisible and trust-able, as soon as possible. UPI seems to be pointed in that direction.
