[vinay_ys]

All payment rails in India are RBI regulated directly or indirectly. NPCI is a non-profit section 8 company which is basically owned by the major PSU and private banks of India. And NPCI operates not just UPI, it also operates NEFT, IMPS, AEPS (aadhaar based payments), NETC (fastag), NFS (ATM network), Rupay debit/credit card network and BBPS (billpay). Only RTGS is operated by RBI directly.

Money serves its purpose while it's in motion. Increasing the velocity of money is good for economy. All the payment rails above do that 24/7/365 with lowest friction – by making all modes of payment possible and for free.

Digital payment rails is an order of magnitude cheaper (all inclusive) compared to cash rails. Accepting notes, counting, and depositing them, doing book-keeping and reconciling it against sales receipts, paying workers and vendors, avoiding leakage and theft etc – all cost time and money. For small merchants, it costs them time away from their business to handle cash.

UPI person-to-merchant (p2m) payments puts money instantly in their bank account. Their bank statements showing P2M deposits help them borrow for working capital at better interest rates.

Risk of theft with cash is much higher than digital theft from their bank accounts. RBI mandated 2FA, velocity checks, cooling-off periods, and awareness campaigns etc help people avoid scams.

W.r.t taxes, GST surveillance does catch merchants who accept high volume of P2M payments but aren't filing GST returns. Conversely, filing GST returns again helps with credit ratings and borrowing on better terms for working capital.

[tecoholic]

Thanks for the additional info. But I want to clarify one thing - I didn’t say anything about cash being a better choice. Both the comments to my response are making it out to be a cash vs digital thing. I am not sure why.

Next, NPCI is a PSU. So what? They are taking govt money to function aren’t they? The costs are borne by the banks which get allocations every budget to keep the system running. So whatever “profit” this PSU is making is literally just the government’s money paid through banks as transaction costs.

It helps with GST surveillance? Okay great. What about suitcases of cash that get passed around during land and property transactions?

2FA, velocity checks…etc., are things that came after the fact. For years no-one took responsibility for lost money. There was no redressal mechanism. ~Even today, does NCPI offers nothing as a redressal mechanism for scam transactions, it leaves it to the banks and individuals to sort it out. Which probably involves police complaints and follow up.~

Edit: I learnt that a redressal mechanism was finally introduced in 2025. So the above statement is invalid.

I genuinely have to ask, why is it hard to accept the shortcomings of the system and acknowledge the cost of running the system?

[adjejmxbdjdn]

You’ve literally stated that you are “not knowledgeable enough to debate if it’s a net negative or positive.” and then you’re wondering why someone who has a significant amount of knowledge about the system in question is finding it “hard to accept the shortcomings of the system and acknowledge the cost of running the system”.

The real question is that given that you don’t know anything about the system, why would you find it so hard to accept that maybe your claims are incorrect? Further, the other poster is not stating that there are no costs of running the system. They’re claiming, correctly, that the costs are far lower than alternative mechanisms.

This is not even hard to see. The cost of running NCPI is trivial compared to VISA/Mastercard’s network, not least because being a private company trying to maximize profits VISA/Mastercard overload their core network costs with the costs of running a massive concierge, gift card and loyalty points business, which is where their profits lie.

[solarengineer]

If it is acknowledgement that you ( and others, I have spoken to various people on this topic) seek that UPI incurs costs, then here you go - I, a fellow tax-payer, acknowledge that the UPI must incur costs.

I find it acceptable to allocate tax money for a system that we as a country can use as an alternative to the Visa and MasterCard duopoly. With UPI as it is today, there are no margins added and passed to the customer, no transactions that are denied, no commissions cut. Payment is very fast, transactions can be proven. We are not at the mercy of any economic attack that the US would subject us to. Many are able to bank, are able to receive payments.

I find it not necessary that the UPI must show a profit. The direct and indirect benefits to the nation are far more important.

Also, "whataboutism" does not help. The suitcases and paintings and other such corruption examples that you cite require a separate investigation and redressal. One must not stop UPI or start charging the everyday person because some of the rich are corrupt. They will continue to exchange suitcases of cash for favours regardless of whether the UPI is chargable or if it even exists.

[tecoholic]

Hello everyone. I am really not sure what I was ranting about yesterday. I have some bones to pick with the system. The crux of it is - it’s not a technological miracle. It’s the government’s will that makes the system function. It’s good for what it does. But I was annoyed by the propaganda like manner people seem to talk about it in discussions.

I didn’t channel them properly and got into an argumentative fit. I apologise for wasting all your time.