The recent demonetisation drive by India's Prime Minister Narendra Modi took the entire country by shock, whether pleasantly or unpleasantly that we won't comment. But, the drive did end up adding two new words to the daily vocabulary of the general people of India; the first one of course being "demonetisation", and the second one was "cashless". Suddenly, after November 8 people starting talking about how to survive in a cashless economy. But, while many might not know, long before the demonetisation surprise was imposed upon us, a number of successful transaction systems such as the Immediate Payment System (IMPS), Unified Payments Interface (UPI) had already been operating in the Indian economy and had made quite a mark for themselves. And, the one name which has made these transaction systems possible is the National Payments Corporation of India.

Founded in the year 2008, Mumbai-based startup the National Payments Corporation of India (NPCI) is the startup which seemed to have rightly predicted the future needs of digital India. Registered as a not-for-profit company under Section 25 of the Companies Act, the NPCI has been closely guided and promoted by the RBI and the Indian Banks’ Association (IBA) as an umbrella organisation for all retail payments across India.

NPCI's main aim is to create good infrastructure for doing high-volume transactions which will end up substantially reducing transaction costs.

As of today, the NPCI is handling a whopping 20 million transactions a day, which is much more than the 2 million transactions figure a day it was handling some five years ago.

Till November this year, the NPCI shareholders consisted of an impressive 56 banks, which constitutes of private sector banks, multi-state cooperative banks, rural banks, public sector banks, and even some foreign banks. During its starting-up phase, the ten banks that originally promoted the NPCI were a good mix of public sector banks, private sector banks (ICICI Bank and HDFC Bank) and foreign banks (Citibank and HSBC).

Here are some impressive NPCI’s innovations since its inception in 2008:

National Unified USSD Platform (NUUP)

In order to enable people with even the basic of the basic phones to be able to successfully access their bank accounts and make transactions, the platform uses USSD channels on GSM phones. This particular banking system has the potential of completely transforming the future of banking for the rural masses of the country.


Debuting in the year 2012, RuPay is probably one of the most famous innovations by the NPCI till date. RuPay is basically India’s very own domestic card scheme that is directly competing with international schemes such as the very famous MasterCard and Visa. NPCI's main aim behind RuPay is to successfully set up a domestic open-loop payment system in the country. Since RuPay transactions are processed domestically, they are cheaper than its global alternatives.

Immediate Payments System (IMPS)

With IMPS, one can send money immediately, and in real-time, from anywhere at anytime. As compared to NEFT, where the transfers are executed in batches every hour, which sometimes results in lags, IMPS transfers are instantaneous, and can be done all around the year. When it was debuted back in the year 2010, it had just a few member banks, but it is now available nationwide.

Unified Payment Interface (UPI)

Built atop NCPI's IMPS platform, the UPI has been able to do away with the need for a person to have to go through the hassle of entering the IFSC code of the recipient and add then adding them to a list and sending the money. All one has to do with UPI is to manually enter a Virtual Payment Address (VPA) which is linked to the beneficiary's bank account. This results in sending money instantly, and that too with a Mobile Phone. The UPI surely has the potential of completely changing Indian banking through a digital disruption.

National Financial Switch

It was setup by the RBI with an aim of having one common banking and retail payment system across the Indian subcontinent. Under National Financial Switch, all functional ATMs across India were linked into a common network. This allowed cardholder of a bank to withdraw cash from their respective bank's ATM as well as other bank's ATM. NFS makes it possible for any bank to join the network and enable both non-financial and NFS enables any bank to join the network and enable both financial and non-financial transactions from any ATM. As of this year, there are over a whopping 2.3 lakh ATMs connected through the NFS. This is inclusive of the 14000 White Label ATMs that are not connected to any bank.

Cheque Truncation System

Also known by the name Image-based Clearance System, the Cheque Truncation System was first implemented in the year 2010 to make cheque processing faster in the country. Under this, all the existing cheques were replaced with the standardised cheques where the cheque data would be captured at the collecting bank and an image of the cheque is then forwarded to the drawee bank. This results in speeding up the process of clearing payments, since electronic data transfer is obviously much, much faster than physical data transfer.

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