Unified Payment Interface: Towards Greater Cyber Sovereignty

Unified Payment Interface: Towards Greater Cyber Sovereignty is an analytical issue brief by Sunil Abraham (ORF Issue Brief No. 380, July 2020). The brief examines the design, institutional context and governance choices underlying India’s Unified Payments Interface (UPI), situating it within global debates on digital sovereignty, competition policy, privacy, surveillance risks and the role of public digital infrastructure. It outlines both the strengths of India’s payments architecture and the structural weaknesses that must be addressed for long-term resilience.

Publication Details
Abstract
Context and Background
Key Themes or Findings
Read
- Full Text (Excerpt)
- PDF
Citation
External links

Publication Details

👤 Author:: Sunil Abraham
🏛️ Published in:: Observer Research Foundation (ORF), Issue Brief No. 380
📅 Date:: July 2020
📘 Type:: Issue brief / policy analysis
📄 Access:: Download PDF

Abstract

This issue brief outlines why India’s UPI has become a global reference point for instant payments and digital public infrastructure. It attributes UPI’s success to strong state intervention, deliberate public–private collaboration, interoperability-by-design, and a mobile-first architecture. At the same time, it warns that UPI’s sustainability depends on addressing governance opacity at NPCI, privacy vulnerabilities, surveillance risks, and competition distortions arising from platform concentration and MDR policies.

Context and Background

The brief situates UPI within the evolution of IndiaStack and the state’s broader agenda to create open, interoperable digital infrastructure accessible to all citizens. It highlights how UPI’s rapid adoption was enabled by Aadhaar-based onboarding, low data costs, bank-led integration and favourable policy incentives. By mid-2020, UPI was already handling billions of transactions per month, making India a global leader in real-time payments.
The paper contrasts India’s approach with more market-led systems elsewhere, arguing that India’s model demonstrates how state-led design can correct entrenched market failures.

Key Themes or Findings

State-led design and market correction:
India used proactive state intervention to build UPI as a public digital utility that corrected market exclusions and enabled universal access to instant payments.
Interoperability and mobile-first architecture:
The four-party model, VPA design, QR interoperability and simple authentication (including MPIN) contributed to frictionless scale.
Governance challenges within NPCI:
NPCI plays multiple roles: operator, standard-setter and market participant. The brief notes that this concentration creates structural conflicts and demands stronger transparency and accountability.
Privacy and surveillance concerns:
NPCI and participating institutions can access large volumes of metadata related to identity, device, geolocation and transaction patterns. The brief calls for tokenisation, stronger cryptography, privacy impact assessments and reduced data retention.
Competition and platform concentration:
Dominance of Big Tech-backed apps raised concerns about fair access, self-preferencing and the sustainability of the multi-bank model. The brief advocates open-source reference implementations to maintain contestability.
Economic sustainability and MDR:
Zero-MDR policies, while helpful for uptake, threaten long-term viability for banks and payment service providers. A calibrated approach is needed to sustain healthy competition.

Read

Full Text (Excerpt)

On 1 July 2020, the Ministry of Electronics and Information Technology (MeitY) of India celebrated #5YearsOfDigitalIndia. Given the recent call by the prime minister for Atmanirbhar Bharat (‘self-reliant India’) the IT minister found the occasion apt for trumpeting a crowning jewel of Digital India — the Unified Payment Interface that was launched almost four years ago. This indigenous innovation has prepared India for both the restrictions on movement required by the pandemic and also more prohibitions against foreign technologies like the ban against China-made apps. This brief outlines the lessons from India’s UPI experience that can be emulated by other countries aiming to provide affordable, ubiquitous and quality digital payment services to their public. While many other countries are still waiting for the magic of the market, the interventionist approach and private-public partnerships fostered by the Indian government has paid off. Course corrections are required, however, to protect the UPI.

Read full text

PDF

📄 Download Full Text (PDF)

Citation

If you wish to reference or cite this publication, please use one of the following formats:

APA style:

Abraham, S. (2020). Unified Payment Interface: Towards Greater Cyber Sovereignty.
Observer Research Foundation, Issue Brief No. 380.
https://sunilabraham.in/publications/unified-payment-interface-towards-greater-cyber-sovereignty/

BibTeX style

@techreport{abraham2020upi,
author = {Abraham, Sunil},
title = {Unified Payment Interface: Towards Greater Cyber Sovereignty},
institution = {Observer Research Foundation},
year = {2020},
number = {Issue Brief No. 380},
url = {https://sunilabraham.in/publications/unified-payment-interface-towards-greater-cyber-sovereignty/}
}

MLA style

Abraham, Sunil. "Unified Payment Interface: Towards Greater Cyber Sovereignty."
Observer Research Foundation, Issue Brief No. 380, July 2020.
https://sunilabraham.in/publications/unified-payment-interface-towards-greater-cyber-sovereignty/