GM Degens! Unless and until you're living under a rock, you would have heard about NPCI (National Payments Corporation of India) or its infamous by-products such as UPI (Unified Payments Interface) and ONDC (Open Network for Digital Commerce). These Indian-based products are taking the world by storm and every nation wants it. Let us understand why?

What is NPCI?

The National Payments Corporation of India (NPCI) is a government-owned organization that plays a crucial role in transforming India's digital payments landscape. It is responsible for developing and managing various retail payment systems, including the popular Unified Payments Interface (UPI), which enables instant and secure money transfers between users. NPCI's innovative solutions have contributed to the widespread adoption of digital transactions, promoting financial inclusion and a cashless economy in India. As a trusted and reliable entity, NPCI continues to drive advancements in the payment ecosystem, making it easier, faster, and more convenient for people to transact digitally across the country.

What is UPI?

Imagine you and your friend have piggy banks with money, and you want to share some of it to buy snacks and toys. Instead of giving physical money, you have a magic tool called UPI. It's like a super-fast messenger for sending money using special codes. You have a secret code for your piggy bank (bank account), and your friend has one too.

With UPI, you both use a special app on your phones like Google Pay. You tell the app how much money you want to send and use your friend's nickname or phone number as their secret code. The magic of UPI instantly transfers the money from your piggy bank to your friend's piggy bank. No need for long numbers or complicated stuff, it's super easy!

Not only that, you can also use UPI to buy candies and toys from a shop! The shopkeeper has a magic app too, and you can pay them directly from your piggy bank using UPI on your phone. No coins or notes are needed, everything's done with your phone! UPI is like a helpful magic tool making sharing and buying super quick and fun!

Why is UPI Famous in India?

1. UPI is Super Easy to Use: UPI is like a magic button on your parent's phone that lets them send money to friends or buy things quickly. They don't need to remember long numbers; they just use their friends' special nicknames!

   

2. Money Moves Super Fast: When your parents send money using UPI, it reaches their friends' piggy banks instantly! No waiting for days, it's like magic!

3. Works with Any Bank: UPI is like a friendly robot that can talk to any bank! So, your parents can send money to their friends, even if they have different banks, like how you can talk to any of your friends at school.

4. Top-Secret Security: UPI keeps your parents' money safe with special codes that only they know, like secret passwords and even fingerprint or eye scans! It's like having a super-strong lock on their piggy banks!

   

5. Helps India Go Cashless: UPI is like a superhero in India because it helps people use less physical money and pay with their phones instead! This makes it easier to keep track of money and is better for the environment too!

6. Shops Love UPI Too: Not just friends, but shops also use UPI! Your parents can buy toys or yummy snacks from the shop using UPI on their phones. It's like magic shopping!

7. Everyone Can Use UPI: UPI is for everyone, even people who live far away! It's like bringing the power of banks to everyone's phones, no matter where they live!

Current metrics of UPI

Now let us look at some metric's how well is UPI

As of June 2023, the total volume of transactions done through UPI (Unified Payments Interface) has reached 9335.06 million. Among these transactions, the largest volume is contributed by P2M (Peer-to-Merchant) transactions.

As of June 2023 the total value of transactions through UPI (Unified Payments Interface has reached 200 trillion dollars in transactions which means you can buy Apple 83 times. The majority of transactions are done by P2P (peer-to-peer)

To understand further statistics please refer to NPCI Offical site :- npci.org.in/what-we-do/upi/product-statistics

What is ONDC?

ONDC stands for Open Network for Digital Commerce. It's a government initiative in India that aims to make online shopping and digital commerce easier and more convenient for everyone. Think of it as a special project to improve how people buy things online and to support businesses that sell products on the Internet.

Here's how it works: ONDC wants to create a platform where different online stores, payment systems, and delivery services can all work together seamlessly. It's like bringing all your favorite online shops, payment methods, and delivery options under one big virtual roof!

For you, it means you'll have a better online shopping experience. You can easily find products from various stores without jumping from one app or website to another. You'll have more choices and maybe even get some great deals!

And for businesses, ONDC helps them reach more customers and grow their online sales. They can join the platform and offer their products to a larger audience, making it easier for you to discover and buy cool stuff.

Crypto Metrics in India.

From 2017 to 2022 there were 134 million active users in India, the highest in the world this was a surge of 760 percent, which is expected to rise to 200+ million in 2023. It did have a fall due to the imposition of a 30% tax on the gains.

Below is the chart demonstrating the rise of cryptocurrency it is expected to grow at 9.83% between 2023-2027

Since the launch of UPI, there have been 260 million active users which is 86% more users between cryptocurrency adoption and UPI adoption.

Impacts of NPCI Protocols on Crypto Adoption

Now that we understand the metrics, let us understand why cryptocurrency adoption lacks behind NPCI Protocols.

Government Initiative:- The Indian government has taken the initiative to encourage more people to use UPI (Unified Payments Interface) by providing a convenient door-to-door onboarding process and helpful guides to assist users in learning how to use UPI effectively.

Fee's:-One significant advantage of UPI over cryptocurrencies is that there are no fees for making transactions from one user to another. On the other hand, in cryptocurrencies, there are multiple fees such as gas fees and priority fees that users need to pay with each transaction. These fees can sometimes be quite high, even reaching up to $20 for a $5 transaction, which can be a hurdle for users with limited earnings. In countries like India, where the transaction amount is usually less than $5 per day per user, there is minimal stress on the UPI ecosystem. Users are comfortable with the daily transaction limit of 1 lakh rupees, which is more than sufficient for their regular payment needs.

Ease of use:- The ease of use is another significant advantage of UPI. Both buyers and sellers find it highly convenient to use. Sellers simply open an account and receive a QR code that buyers can scan to make payments. Buyers do not need to learn the technicalities of the system or even understand complex operations on their phones. In contrast, dealing with cryptocurrencies can be a complicated process right from the beginning, involving tasks like remembering or writing down cryptographic seed phrases.

Scam:- UPI has proven to be more secure against scams compared to cryptocurrencies. Scams are less prevalent in the UPI system, and since it is centralized, recovering money in case of fraudulent transactions is relatively easier. In contrast, scams in the cryptocurrency world are more common, and the decentralized nature of cryptocurrencies makes it almost impossible to recover lost funds in many cases.

Transaction speed:- Transaction speed is a critical factor in payment systems, especially for businesses. With UPI, when a buyer and seller agree on a deal, the buyer can instantly transfer the agreed amount to the seller, and the transaction is completed in real-time without any waiting for confirmation. This swift process allows businesses to receive payments quickly and proceed with transactions seamlessly. In contrast, some blockchain systems, like certain cryptocurrencies, require multiple confirmations from nodes on the network, leading to delays that can take hours to days. This slow transaction speed can be impractical for businesses that rely on timely settlements. UPI's instant transaction capability makes it a viable and efficient choice for businesses, offering convenience and speed in their payment processes.

Criteria:- Platforms like ONDC offer an inclusive approach, allowing individuals to list their products on the platform based on specific criteria that sellers need to fulfill. This ensures that only legitimate and trustworthy sellers are onboarded, creating a secure environment for buyers. In contrast, blockchain-based platforms, due to their inherent anonymity, can make it challenging for buyers to trust sellers. ONDC, on the other hand, provides comprehensive information about sellers, establishing transparency and accountability. By taking responsibility for any mishaps that may occur, ONDC fosters trust between buyers and sellers, promoting a safer and more reliable marketplace for all parties involved.

Conclusion

UPI (Unified Payments Interface) and ONDC (Open Network for Digital Commerce) have become popular and widely accepted in India for their user-friendly and convenient features. UPI allows instant and secure money transfers between users, contributing to a cashless economy. Its government support, robust security, and absence of transaction fees have driven its widespread adoption. On the other hand, ONDC aims to create a unified platform for online shopping, offering a seamless experience for buyers and sellers.

Despite the success of UPI, cryptocurrency adoption has also seen significant growth in India, particularly among the youth. Around 134 million active cryptocurrency users were recorded from 2017 to 2022, and this number is expected to surge to 200+ million by 2023. However, the adoption of cryptocurrencies lags behind UPI due to factors such as transaction fees, complexity in usage, and security concerns related to scams and lack of recoverability. Nonetheless, the growing interest of the youth in cryptocurrencies suggests that both centralized and decentralized systems will coexist as viable options in India's financial landscape, which is continuously evolving.