On the road to a cashless economy with India Stack
Demonetisation may have jolted the Indian economy but it was, by no means, an unplanned move. The Government of India has been working towards making India a cashless economy for several years.
India Stack, developed by iSPIRT or the Indian Software Product Industry Round Table, is one such innovation that aims to help the government, the citizens and entrepreneurs to interact with each other through an open digital platform.
India Stack is a set of application programming interfaces (APIs) that allow governments and private companies to use cashless and paperless technology products. The stack comprises of APIs that are independently maintained by their owners, but India Stack as a whole drives adoption by developers by organising events.
The Aadhaar card is the main enabler for these services, allowing easy authentication and supporting cashless transactions on a digital platform. Documents stored in a digital locker allows companies to give customers insurance coverage, allow them to invest in mutual funds, and provide education loans to students.
The stack consists of UIDAI, a unique identification number that is linked to biometric readings of the individual. Aadhaar is the world’s largest national identity project. The e-KYC project was added to Aadhaar based on industry feedback. This allows companies and organisations to get instant verification of customers along with date of birth and residence address. The National Payment Corporation of India developed the Aadhaar Enabled Payments System (AEPS). AEPS improves financial inclusion, allows small retail outlets to go cashless, allows disbursement of government entitlements, facilitates bank to bank fund transfer in a safe manner, and is the foundation for a full range of banking services.
The National Payment Corporation of India also launched and maintains the Unified Payment Interface. The UPI system allows for both a pay request, where a customer sends funds to a beneficiary, and a collect request where a customer can request payment from a remitter. A virtual id is used to process the transactions, which is similar to an e-mail address. Adoption of UPI is important to get India to start trading and digital transactions.
eSign is an API to facilitate Aadhaar card holders to digitally sign documents. The authentication supported is through biometric readings or a one-time password. The eSign API hopes to remove a lot of paperwork from the authentication process, as well as provide a legally valid signing mechanism. DigiLocker is a Government of India repository for documents. Users sign up for the service, link to Aadhaar card, upload their documents, eSign them, and share the documents on request.
UIDAI, e-KYC, AEPS, UPI, eSign and DigiLocker form the India Stack. There are four layers in the stack, the consent layer, the cashless layer, the paperless layer and the presence less layer. Each layer is designed to operate independently of the others. The APIs can be used for any kind of hardware, from desktops, to mobile phones, to wearables. Access to each API requires a sign up for that particular service, and there are various payment models.
Adds Nandan Nilekani, Former Chairman of Unique Identification Authority of India (UIDAI) who is a mentor at iSPIRT: “The final two layers of the “India Stack” have great relevance to the future of banking. The Unified Payment Interface (UPI) layer, a product built by the National Payment Corporation of India (NPCI), a non-profit company collectively owned by banks and set up in 2009, will revolutionise payments and accelerate the move towards a “cashless” economy. So “pushing” or “pulling” money from a smartphone will be as easy as sending or receiving an email."