Nick did not have Venmo and I do not use Paypal. The amounts were small and odd and I had not got used to paying using my mobile banking app that was too complex to use. It was my first week as a student in the US and we were just settling a group lunch amongst a few friends. I had got so used to paying using 24*7*365 Unified Payment Interface (UPI), back home in India, there were times when I opened my wallet only to embarrassingly realize that there is no cash. So this was a unique challenge. In the end, we resolved it where I paid a friend who had both Venmo and Paypal that Nick had and paid him! So clearly it was a complex solution using a ‘correspondent individual’ just like the global payments network uses a ‘correspondent bank’.

In India, sending this money would have been as simple as sending a text using the new age 24*7*365 digital age central payment clearing service known as Unified Payments Interface (UPI). UPI has allowed the creation of an open-loop payment system that any player can plug into. It does not matter which bank/wallet one is a member of, you can connect to any other member on any other network with a UPI single identity.

UPI system uniquely solves the problem of real-time payments and identity verification and is built on four pillars of presence less, paperless, cashless, and consent. The recently introduced video Know-Your-Customer (KYC) norms make it the most advanced payment systems in the world. India has also transferred billions of dollars of aid directly to the account of individuals using the same stack. This has allowed it to reduce leakages. Google has also written to the US Fed recommending a system designed on the same architecture.

In its 2019 F I Serv - Flavours of the fast- report, the US received a rating of 4 along with 31 other countries, 6 countries received a rating of 4+ and India was the only country that received a 5+ for its UPI payment system.

An open-loop API enabled payment system will open floodgates for innovation and reduce the cost of transactions for people, especially at the bottom of the pyramid. The small shop owner, three generations old local restaurant, even the large supermarkets, all pay a high percentage as a fee on cards in absence of seamless 24x7x365 real-time payments.

Given the Covid-19 crisis and issues faced by banks in transferring the COVID stimulus, a system like this would benefit millions. What’s more, the unemployment benefits could also be shifted to such a platform making the process highly efficient and targeted avoiding wrong or delayed payments.