National Payments Corporation of India and the Remaking of Payments

In less than two decades, India’s payment systems went from an overworked network of clearinghouses, deferred transaction settlement, and a lack of regulatory structure for payments to one that operates in real time, is biometric capable, and is connected beyond what most financial systems around the world have achieved. The story of the National Payments Corporation of India (NPCI), a not-for-profit organization founded in 2009 to manage India’s retail payment systems, sheds light on this quick, but robust, transformation. From a domestic Automated Clearing House (ACH) solution and the RuPay card scheme, to the much-discussed Unified Payments Interface (UPI) and Aadhaar-enabled payments, NPCI has relentlessly driven innovation. NPCI was also central to India’s ambitious financial inclusion scheme, the Prime Minister’s Jan Dhan Yojana. The lessons learned from the NPCI success story can be useful for policy makers in financial inclusion and other markets. Some factors illustrated in the NPCI story include: An industry-led approach to ownership and governance, with strong regulator backing. Competitive economics through a utility model, mixed with smart growth and a start-up culture. A strategy of incremental, open-source product development. A government/regulator that uses carrots and not only sticks. A government/regulator that balances caution with progress.