Slashdot Mirror
India's Audacious Plan to Bring Digital Banking to 1.2 Billion People (bloomberg.com)
Saritha Rai, reporting for Bloomberg: India is trying to yank its cash-based economy into the 21st century. But how do you get 1.2 billion people, many of whom have never seen a bank or opened an account, to send digital payments to each other? The government's answer is an effort it has named the Unified Payment Interface. Debuting Monday, it's a system designed to make transferring and receiving money as easy as exchanging e-mail or text messages. The goal is to bring banking and financial services to hundreds of millions of citizens, many of them poor and disadvantaged, in one fell swoop. The network was created by India's retail banks and backed by India's central bank -- and they're confident it will work because it's built on top of an even more audacious project: India's biometrics-enabled national ID system, called Aadhaar after the Hindi word for foundation.The idea is to make mobile payments and utilization of other services between users with accounts in different banks frictionless. The Aadhaar number, or a virtual address, will serve as the single identifier. This will also allow a person to use several services of a bank without being its customer, explains Forbes India. The UPI app is in phase-I and is operational for a closed user group. The app is expected to be launched for public in the coming months.
I'm just not sure if it'll be a "Come for the dystopian surveillance; stay to enjoy the fraud!" or the other way around...
The main motivation for this scheme is entitlement reform. In the past, India provided subsidized rice to the poor, and about 80% of the rice was typically stolen before it reached the intended recipients. Under this new system, the poor will have money transferred directly to their e-accounts, so they can then buy rice (or something else that they need) in local markets. So even if there is plenty of fraud, it will still be better than what it replaced. One thing that Indians have plenty of is low expectations.
What good does access to digital currency and "financial services" do for anyone but the banks?
Imagine you're an Indian farmer and you take your goods to a buyer. Now you can be paid immediately and electronically, and you won't be robbed as you and your oxe and cart make your 20km journey back to your village.
Imagine you're a woman in India doing piecemeal work. Now you can be paid on your 2G flipphone and your husband can't take your earnings and blow it on liquor.
Imagine you're a worker working in Mumbai and your wife and family are in Delhi. How do you get your money back to them without paying huge fees? Just transfer it digitally.