[ta7789]

People seem to have a general distrust about the Indian government and the UPI system. There are certainly a lot of conspiracy theories floating around.

The plain idea of UPI is that it is publicly funded digital infrastructure. The US has networks such as Mastercard, Visa, etc. These are privately run digital infrastructure that facilitate digital payments. UPI is publicly funded digital infrastructure. AFAIK it is legal for private digital infrastructure such as Visa, MC, etc to exist. However, due to the tax payer funded nature of UPI the fees are way lower than private digital infrastructure can offer. This has been the main criticism against it by the private players.

Let's be clear, governments everywhere build roads using taxes and offers them for "free" to the citizens. That doesn't stop private entities from creating private roads for a fee. However, no private entity tries to build road infrastructure as it is not a profitable business. Thats the same situation with digital payments in India due to UPI's existence. That doesn't mean that private businesses cannot offer their own private payment networks with value added services to compete with UPI.

The mindset in the west is very different than the east which leads to a whole lot of unfounded criticism on here.

[sifar]

>> The plain idea of UPI is that it is publicly funded digital infrastructure

UPI is developed by NPCI which is a consortium of Indian banks (public and private), supported by RBI[0]. It is a not-for profit, but not publicly funded.

The fees are lower right now since they want to proliferate the use and get a monopoly over Visa/Mastercard. Once done, expect them to be at par. They just added some fees this march [1].

The distrust is not conspiracy theories but common sense when you observe how other entities have behaved previously.

[0] www.npci.org.in [1] https://www.thehindubusinessline.com/blexplainer/interchange...

[alephnerd]

> It is a not-for profit, but not publicly funded.

That's a bit disingenuous.

51-55% of NPCI's ownership is the RBI and PSU Banks (operated by Ministry of Finance) [0], so in reality it's a public private partnership between the Ministry of Finance and Private Sector banks.

A good comparison to the NPCI would probably be the Federal Reserve system in the US, but NPCI is a bit more autarkic.

[0] - https://www.npci.org.in/PDF/npci/corporate-governance/shareh...

[sifar]

I mean technically yes, but the reason I feel it is nothing to cheer about is if you understand how these public funded corporations work in India. They are mostly the worst of both worlds - you get a monopoly with lousy service.

For e.g the case of IRCTC which is the commercial arm of Indian railways and look at the insane price gouging that has been happening.

In the end, people end up over paying for sub-par products/services.

[WeylandYutani]

Visa/MasterCard is an extension of the American government.

I distrust them more than my local government.

[theWreckluse]

Can you please provide references/sources for the last statement.

[sifar]

Err ... more recent, not Indian but :) ... OpenAI. Basically almost any startup that was trying to acquire market share with VC money. Couple it with the Indian government's penchant for digital surveillance and you ignore it at your own peril.

To clarify, I am not saying UPI is not useful - it is to millions of people, but it is also not benign that it is made out to be.

[padiyar83]

Thank you for bringing this clarity. And as an Indian citizen I am glad we took this step towards building an independent payments infrastructure, given how critical a payments clearance system is to the functioning of a modern economy.

I don't want other governments to hold us hostage through Visa's and Mastercard's where we are just one sanction away from economic meltdown. Just like what happened recently in Russia.

As a country we should be looking at securing other such critical support systems - Power control systems, Telecom hardware etc. That's the only way IMO to be truly independent!

[villgax]

In case you are not aware, UPI is basically a rebranded IMPS with Venmo style of address. Until UPI actually works internationally it is still a domestic payment system.

[hestefisk]

Singapore’s PayNow interfaces with UPI as well as PromptPay (Thailand). It’s only a matter of time before these payment rails get interconnected and SWIFT is history.

[nooby12345]

Who built the IMPS?

[villgax]

Technically based off the same network as ATMs by IDRBT, https://en.m.wikipedia.org/wiki/Institute_for_Development_an...

Unified Payments Interface is built on top of IMPS, with the key architectural work done by the Mobile Payments Forum of India, IIT Madras and IDRBT

It is managed by the National Payments Corporation of India (NPCI) and is built upon the existing National Financial Switch network.

[ta7789]

Absolutely, the US government has a long tradition of weaponizing US Dollar and SWIFT to cut off countries from global trade. This is a fact that has been happening ever since the petrodollar was invented. Governments all over the world, especially India, have realized this is a big vulnerability and a threat to their country's sovereignty. India, Brazil and several countries across the world have invested in their own infrastructure as they rightly should to keep their economic independence.

For those who don't know India has been on the receiving end of US sanctions for a variety of reasons. While the reasoning behind the sanctions has been long debated, it is plainly obvious from the Indian vantage point that economic independence is very critical for their survival.

[realityking]

> For those who don't know India has been on the receiving end of US sanctions for a variety of reasons.

According to wikipedia[0] there‘s only ever been two sanctions against India by the US. A short lived one from 98-99 because of a nuclear ban and a much longer one from 92-2011 related to the space program/missile development.

A quick search didn‘t turn up any current US sanctions either. Were there more sanctions or are you referring to these two?

[alephnerd]

There were recent (2019-2022) conversations about sanctions against India for buying S-400 missile launchpads [0]

This was dropped after a last minute amendment of CAASTA [1].

Though, if we're actually being honest, there was no real chance of sanctions actually being placed - it was just a negotiating ploy, and Indian Weapons manufacturers are increasingly working with American companies like GE and General Dynamics for IP transfers, though they lag behind Israel, France, and Russia in that market (FCPA's ability to pierce the corporate veil and an imo rightful aversion to IP transfers to generic competitors plays a big role in America's lag in the Indian defense market).

[0] - https://www.thehindu.com/news/international/us-discourages-i...

[1] - https://www.outlookindia.com/national/us-house-votes-for-caa...

[ta_vf7xjd34cc]

> A quick search didn‘t turn up any current US sanctions either.

The US and Indian governments have had bad relations for a long time. The US has the habit of weaponizing anything and everything. While not exactly sanctions, people don't forget things like PL480[1] that easily:

> Many of us still have hurtful memories of the mid-'60s when, after two successive years of savage drought, India desperately needed American wheat under the US Public Law 480 on rupee payment — and at relatively low prices because the country had no foreign exchange to buy food in the world market. Indira Gandhi had just become prime minister and chose to go to Washington on an official visit. Lyndon Johnson gave her a gushing welcome and responded to the food problem confronting her effusively, promising as many as 10 million tons of PL480 wheat. However, at an early stage the transaction turned sour.

> Infuriated by India's criticism of American bombings of Hanoi and Haiphong in the course of the Vietnam War, the irascible Texan put food shipments on such a tight leash that India literally lived from ship to mouth. With every morsel we swallowed a little humiliation. When told that the Indians were saying exactly the same thing as the UN Secretary-General and the Pope were, Johnson had retorted: "The Pope and the Secretary-General do not need our wheat."

[1] Swallowing the humiliation (http://archive.indianexpress.com/news/swallowing-the-humilia...)

[pyuser583]

Interesting. There are a lot of stories from the 1960s about us giving/trading food to India.

The US had a massive surplus, and was trying very hard not to destroy excess food.

They sent food to India, because the alternative was to let it go bad. And they would thank India for taking it.

But when diplomats realized this was happening, they tried to use it to extract concessions from India.

So India was being told “please take this food,” then “now that you’ve taken the food you owe us.”

India wasn’t exactly pure in this either.

India has been thankfully free of widespread famine since the British left. But internal controls created shortages, which were unnecessary.

India could have fed itself, but that was politically untenable, just as it was politically untenable for the US government to destroy food or stop paying farmers to overproduce.

[jeff_d_miller]

Domestic mismanagement in India can hardly be called a sanction by the U.S.

In other words, how would an independent financial system have helped India to put food on the table?

[ta_vf7xjd34cc]

> Domestic mismanagement in India can hardly be called a sanction by the U.S.

There is more to this.

The partition of India in 1947 divided Punjab in such a way that most of the fertile land went to Pakistan. Food shortages were soon a reality that would take decades to resolve.

There is also this theory that explains the partition of India in terms of the (then) looming Cold War. Creating Pakistan and supporting its claim on Kashmir prevented the USSR direct access to the Arabian Sea through Afghanistan and then India.[1][2][3]

> [Jinnah] was backed by British imperialists, notably Winston Churchill, who believed Pakistan would prove a faithful friend to the West and a bulwark between the Soviet Union and a socialist India.

> independent financial system

It is not a question of the financial system in particular, but of attitudes. The US has historically not shied away from using every available tool in order to achieve its geopolitical goals, be it finance or aid. But these actions cast long shadows that have to be dealt with generations after the people involved are long dead and buried.

[1] Who Is to Blame for Partition? Above All, Imperial Britain (https://www.nytimes.com/2017/08/18/opinion/india-pakistan-pa...)

[2] Partition through the looking glass (https://www.thehindubusinessline.com/opinion/partition-throu...)

[3] Baghdad Pact (https://en.wikipedia.org/wiki/Baghdad_Pact)

[miohtama]

The US has a tradition in messing with banking, but it’s not long. While sanctions have existed forever, weaponzing the banking system did not start until the last decade or two, when more power was given to FATF, and other non-elected international bodies led by the US.

[SanjayMehta]

The fact that it's public infrastructure and has no transaction fees is the source of much of the negative press.

Both Mastercard and Visa went complaining to the US govt about UPI and RuPay because they foresee their duopoly ending.

[WeylandYutani]

Yep Americans will tell you it is normal for a company to take 1-2% of every transaction. Don't believe their lies.

[ta7789]

Correct. Public infrastructure can (but not usually is) run at a loss for the welfare of the citizens. That's the whole point of public infrastructure. MasterCard and Visa have been complaining for a _long_ time about this issue as it undercuts their profitability.

[pyuser583]

If they could, Mastercard and Visa would outlaw all currency except pennies.