Google wants U.S. Fed to follow India’s UPI example

Planning, design were key, says Mark Isakowitz, vice president, Government Affairs and Public Policy, U.S. and Canada, Google.

December 14, 2019 10:55 pm | Updated 10:55 pm IST - New Delhi

The company said it worked closely with the National Payments Corporation of India (NPCI), the payment regulator governed by the Reserve Bank of India (RBI), to build ‘Google Pay’ for the Indian market./ Photo for representation

The company said it worked closely with the National Payments Corporation of India (NPCI), the payment regulator governed by the Reserve Bank of India (RBI), to build ‘Google Pay’ for the Indian market./ Photo for representation

In a thumbs up to India’s Unified Payments Interface (UPI) scheme, Google has written to the U.S. Federal Reserve Board detailing the successful example of UPI-based digital payments in India in order to build ‘FedNow’ — a new interbank real-time gross settlement service (RTGS) for faster digital payments in the U.S.

In a letter written by Mark Isakowitz, vice president, Government Affairs and Public Policy, U.S. and Canada, Google, the company said it worked closely with the National Payments Corporation of India (NPCI), the payment regulator governed by the Reserve Bank of India (RBI), to build ‘Google Pay’ for the Indian market.

NPCI deployed a real-time payment system UPI in 2016. UPI was thoughtfully planned and critical aspects of its design led to its success, Google said.

“First, UPI is an interbank transfer system [there are now over over 140 member banks, after initially launching with 9 participating banks]. Second, it is a real-time system. Third, it is ‘open’ — meaning technology companies can build applications that help users directly manage transfers into and out of their accounts held at banks,” Mr. Isakowitz wrote to Ann Misback, secretary, board of governors of the Federal Reserve System.

10% of GDP

“After just three years, the annual run rate of transactions flowing through UPI is about 10% of India’s GDP, including 800 million monthly transactions valued at $19 billion,” said the company in the letter dated November 7, which surfaced on Saturday.

Google Pay’s monthly active user-base grew three times to reach 67 million in September this year — up from 22 million in the same month last year.

According to the latest Worldline report titled ‘India Digital Payments Report — Q3 2019’, the total volume of UPI transactions in Q3 2019 in India touched 2.7 billion, a whopping 183% rise from a year ago. In value, UPI clocked ₹4.6 trillion, up 189% from Q3 2018.

The number of transactions done on mobile wallets was 1.04 billion, a rise of just 5% over the previous year period, while the value of transactions in the July-September period was ₹466 billion, an increase of 2% over Q3 of the previous year, the report said.

According to a recent Assocham-PWC study, digital payments in India will more than double to $135.2 billion in 2023 from $64.8 billion this year, with a compounded annual growth of 20.2%.

Google said after learning its lessons from the India digital payments market, it offered specific suggestions to the Fed Reserve to “support real-time low-value and high-value payments, use standardised messaging protocols with extended metadata, and provide clear standards for an Application Programming Interface (API) layer that enables licensed non-financial institution third parties to access and submit requests into this payment system.”

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