Tuesday, May 24, 2022

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    The technology that powers UPI

    Do you still remember demonetization? I do!

    With the demonetization of old 500 and 1000-rupee notes, being able to transmit money online has become a need. With this, UPI (Unified Payments Interface) has received a lot of attention as the future of digital payments in India, and rightly so.

    The National Payments Corporation of India created UPI to move towards a “less-cash” and more digital society. It’s just one of the India Stack team’s numerous projects aimed at making India a Digital India. It is a one-of-a-kind platform that democratizes access to one’s money in the financial system, as previously said.

    While there are numerous publications on how UPI works and the benefits it provides, I wanted to focus on the design thinking that went into developing this technology platform. UPI stands itself as a really creative and future-proof platform thanks to the three distinctive design patterns it has chosen.

    • Authentication and authorization are separated.
    • Facilitation of transactions by a third party
    • Identity management federation

    Authentication and Authorization:

    The authentication of the transacting individual and the authorization of the transaction are usually done in the same transaction by most traditional payment gateways. On the other side, the UPI platform has successfully decoupled the verification of identification from transaction authorization.

    Facilitation of transactions by a third party:

    The UPI platform works on a broker model, which means it permits role-based information transmission between parties involved in a transaction. This role-based brokering enables a very flexible four-party transaction model, resulting in a highly interoperable financial system.

    Identity management federation:

    The possibility to become multi-modal in terms of Identity is the first major benefit of separating Authentication and Authorization. UPI as a platform enables a variety of authentication methods, including both knowledge-based and biometric identification.

    Hence, these are just a few examples of the kind of forward-thinking design thinking that went into the creation of the UPI platform. Many more instances can be found on the other platforms championed by the India stack, which continue to fuel India’s ability to leapfrog into the digital world through technology.

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