Internet access has to be an open platform; it can't be a walled garden: Nandan Nilekani

Interview with Former UIDAI chairman; co-founder, Infosys

After stepping down from the Unique Identification Authority of India (UIDAI), Nandan Nilekani has been advising several organisations - including National Payments Corporation of India (NPCI) and think tank iSpirt - on how to take the work he had done to the next level by building technology layers to solve many common problems. One such idea, the unified payment interface (UPI), expected to help the country become a cashless society, has just been launched by NPCI. In an exclusive interview with Bibhu Ranjan Mishra & Alnoor Peermohamed, he talks about moving towards a cashless economy and freedom of internet, among others. Edited excerpts:

After Aadhaar, you were highly optimistic about the disruption in the financial services space. Now, with the launch of the unified payment interface (UPI) by National Payment Corporation of India under your guidance, how is the segment expected to transform?

Once more and more people have unified payment interface (UPI)-compliant apps on their phones, more and more business correspondents (BCs) and merchants can open up to using UPI. You will have more outlets faster. For example, in a village if one has a device with a UPI-compliant app, one can transfer money from his/her account to the account of the BC who in turn can give out cash. So every merchant can become a BC. The model of BC would spread faster, and also cashless economy can spread much faster.

After UID, you have been evangelising the use of Aadhaar to disrupt the payments' space. When did the concept of UPI come to your mind?

We started having some conversation in this regard towards the end of our stint at UIDAI. NPCI had already built the immediate payment service (IMPS) system and it was a huge success. But IMPS was not meant for merchant transaction because that did not offer a good debit capability. It had more become a remittance product. After I stepped down (from UIDAI), I started spending more time on this. We also saw the growth in smartphone penetration in the country. So it all added up together.

While UPI will allow person to merchant, merchant to person, and person to person money transfer, it won’t enable transfers between non-bank wallets. Do you see there is a possibility of this, going forward?

As of now, the Reserve Bank of India (RBI) has allowed this (money transfer) only between banks. It’s up to the RBI if they want to further liberalise.

Do you see a possibility of large global internet companies using UPI?

UPI is an open platform and that's why it is so important that we make it popular. It's because we want payments to be open and not through any gatekeeper types of organisation.

You are one of the industry experts who are pioneering ‘India Stack’ — to build applications on the Application Programming Interface (API) which has been made open by the Government — for solving various issues that the country is facing. In what stage of journey it is now?

In ‘India Stack’, Aadhaar authentication and eKYC have already been rolled out and lots of people are using it. eSign also has been launched. Then the digital locker system needs to be launched with ecosystem approach which the Department of Electronics and IT is working on now. While the UPI has already launched, the other thing that is expected to get done this year is the 'consent architecture’ which would allow lenders to legally access the digital footprint of a potential borrower’s financial history. Good and Services Tax is expected to come up in next year or so. So, all these are work in progress.

Apart from financial inclusion through technology, you have been supporting freedom of internet. You were one of the critics of Facebook's Free Basics programme and termed it a 'walled garden'. Now, they have demolished both the wall and garden. In a country where internet penetration is still very low, how can it be universalised?

Obviously, internet access should become universal. There are many ways to do it. We had suggested doing it through direct benefits transfer for internet data packs. You can do it through Wi-Fi hotspots or free data. There are so many ways to do this. But it has to be an open platform. It can't be a walled garden.