India Debuts Unified Payment Interface Program

India just took a major step toward giving its cash-driven economy a mobile payment spin.

The country’s Reserve Bank of India (RBI) announced the launch of a new mobile-powered system called “Unified Payment Interface” (UPI), which has been designed to facilitate money transfer through email and text messages, Bloomberg reported.

The launch of the service comes after the Indian government’s continued efforts to devise a mechanism that could help improve financial inclusion in the country — the second most populous in the world. According to a PricewaterhouseCoopers report, over 233 million Indians have never visited a bank, and a majority of bank accounts maintain a zero balance.

As gargantuan as the task might seem, the Indian government seems confident about the success of UPI as its new system builds off of the country’s biometric-powered national ID system called “Aadhaar” — a 12-digit unique identification number that encompasses biometric information of registrants, including fingerprints and iris scans. So far, the government has succeeded at registering 80 percent of the population under the program.

“The robust system will help India leapfrog the desktop and the credit card economy to become a mobile-first economy, accelerating eCommerce and driving a host of financial services,” said Nandan Nilekani, an Aadhaar advocate, in an interview with Bloomberg.

While the UPI system would utilize mobile carrier services and Aadhaar’s unique identification number for sending and receiving funds, RBI is relying on its payment banks to get the project off the ground.

“We are taking a bet on payments banks. Paytm is an innovative firm, and innovative firms are not always comfortable with the regulators. But we want to see where they push the system, and so, they have a payments bank license. We are looking at these telecom companies and these startups and figure out as we go. Then, we would know what more structure that we have to put on the system,” said RBI Governor Raghuram Rajan.

“UPI has the potential of transforming the entire payments ecosystem in the country,” said Binny Bansal, Flipkart’s cofounder. ECommerce giant Flipkart is reportedly in the process of developing a mobile app that will utilize UPI to authenticate and complete transactions. The app, Bloomberg said, would allow Web shoppers to pay bills, receive paychecks and wire money using just a phone number in areas of the country.