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India to upgrade its digital payments infrastructure

The National Payments Corporation of India (NPCI) is upgrading the IT systems of all its key payment channels, including the Unified Payments Interface (UPI), Immediate Payment Service (IMPS), Aadhar-Enabled Payment System (AePS), and the National Automated Clearing House (NACH).

The modifications will focus on enhancing capabilities to process increased volumes, improving resilience to external outages seen at banks, and will include an architectural revamp of IT systems to better process credit return pile-ups.

The move was made as the organisation anticipates online transactions to soon hit a billion a day, according to a news report. NPCI aims to complete these system migrations by the end of FY21. The upgrades will not only deal with current concerns but will also consider the scope for future growth and the related complications.

NPCI’s internal IT team already finished the upgrades to UPI and NACH systems in January, the report noted. The work on migrating AePS and IMPS services to new systems will now start and is expected to finish by March.

The report added that since the pandemic, digital payments in the country have increased significantly. In January alone, UPI processed a record 2.3 billion transactions. NACH processed a record 325 million transactions in December 2020, the latest period for which data is available. AePS (core architecture for most government direct subsidy and relief delivery) and IMPS both witnessed massive growth.

Earlier this month, NPCI announced the ‘NPCI PayAuth Challenge’, a global-level hackathon seeking alternatives for the authentication of UPI transactions. One of these alternatives is biometric. The prize money is US$20,000.

This hackathon is supported by APIX, the world’s first cross-border, open-architecture API marketplace and sandbox platform, a media report explained. The challenge strives to explore the feasibility of alternative payment authentication mechanisms and the consequent user behaviour towards such authentication mechanisms.

Fintechs, solution providers, and developers can submit their solutions to simplify authorisation and integrate the innovative technology into UPI. The hackathon challenge will be a global contest for individuals and enterprises offering technology solutions in payments especially suited for startups with ready solutions that can be piloted with limited additional development and integration efforts.

Registration has begun and the solutions should showcase the end-to-end procedure of the transaction. Also, the participants must include customers initiating the transactions, authorisation, and parameters to enable risk scoring users and transactions.

The challenge gives participants a chance to work with NPCI to develop a solution that will change the digital payments landscape in India. Arif Khan, the Chief Digital Officer of NPCI noted, “Fintechs play a pivotal role in cementing the foundation of the dynamic, ever-evolving digital payments industry. We are confident that this journey will culminate in the incubation of promising ideas full of potential and reach the apogee of success simultaneously empowering talented Fintechs with the right kind of mentorship, expertise, and resources.”

NPCI has organised many similar hackathons, ideathons, grand challenges, and API accelerator programmes to empower the start-up community. Interested candidates can register themselves and submit their proposals by 28 February.

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