The United States, the epicentre of financial innovation and growth, has long been the undisputed global leader in finance. The leadership position may, however, see a swift change in the near future, given the tectonic shifts being witnessed in recent years led by India’s innovative Unified Payments Interface (UPI). It’s a stupendous success story which is revolutionising the payments industry in the country.
The world is taking note and over 30 countries have expressed interest in adopting UPI, a resounding acknowledgement of the revolutionary concept which has unlimited potential on a global scale. In contrast, most developed countries continue to rely on relatively inefficient card systems.
UPI’s impact lies not only in reinventing the payment infrastructure, but also in optimising the behaviour of banks and other participants in the ecosystem resulting in economic growth. Faster and more convenient transactions enable people to buy and sell more goods and services in a shorter period of time, helping the growth of the economy.
Instant transactions help in consummating local commerce and creating and enabling new market places, a must for any economy. What makes UPI even more impressive is its monumental success in bringing competing players (like banks, wallets, etc) onto the same platform with the promise of creating a larger market and reducing the cost of transactions to almost zero.
On the global landscape, no other country has managed to accomplish as much as India has achieved with UPI. This begs the question, why is the rest of the world lagging behind? Especially the US, the world leader in finance. We compared India’s instant payment options (UPI) with the US’ nearest options (FedNow and existing card systems).
The FedNow system (created by and routed through the Federal Reserve) works like the real-time gross settlement (RTGS) system in India and is considerably different from the UPI [which routes itself through a separate non-profit body, the National Payments Corporation of India (NPCI)]. However, it is the closest the US has come to achieving instant remote transactions. The disparities between UPI and FedNow illustrate the backwardness of the US system as compared to India.
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