In a thumbs up to Indian government’s Unified Payments Interface (UPI) scheme, Google has written to the US Federal Reserve Board detailing the successful example of UPI-based digital payment (i.e Google Pay) in India in order to build “FedNow” – a new interbank real-time gross settlement service (RTGS) for faster digital payments in the US.

In a letter written by Mark Isakowitz, Vice President, Government Affairs and Public Policy, US and Canada, Google, the company said it worked closely with the National Payments Corporation of India (NPCI), the payment regulator by the Reserve Bank of India (RBI) to build Google Pay for the Indian market.

According to Google, UPI was thoughtfully planned and critical aspects of its design led to its success. “First, UPI is an interbank transfer system (there are now over 140 member banks, after initially launching with 9 participating banks). Second, it’s a real-time system. Third, it is ‘open’ — meaning technology companies can build applications that help users directly manage transfers into and out of their accounts held at banks,” Isakowitz wrote to Ann Misback, Secretary, Board of Governors of the Federal Reserve System.

The adoption of the system was rapid, growing from 100,000 monthly transactions to 77 million, to 480 million, to 1.15 billion monthly transactions in the first 4 years. “After just three years, the annual run rate of transactions flowing through UPI is about 10 percent of India’s GDP, including 800 million monthly transactions valued at $19 billion,” declared the company in the letter dated November 7.

The letter further added that “Google has been a successful market participant in India’s use of UPI, and Google Pay provides one of the three leading mobile applications that use UPI, as measured by transaction volume.” Google stated the use of debit, credit and pre-paid cards also nearly doubled during the same period. Even Caesar Sengupta, Google’s Payments Lead has also been pretty vocal about UPI’s success. He recently tweeted that the right model for driving digital payments is through a partnership between the banks, governments & tech companies through open and standards infrastructures like UPI.

Google Pay’s monthly active user-base grew three times to reach 67 million in September this year – up from 22 million in the same month last year.

UPI Witnessed a Growth of More than 1,000% Through FY2017-18

According to a recent Worldline report, titled “India Digital Payments Report – Q3 2019,” the total volume of UPI transactions in Q3 2019 in India touched 2.7 billion, a whopping 183 percent increase from the same three-month quarter a year ago. In terms of value, UPI clocked Rs 4.6 trillion, up 189 percent from Q3 2018.

The number of transactions done on mobile wallets was 1.04 billion, an increase of just 5 percent over the previous year while the value of transactions in the 3-month period (i.e from July to September) was Rs 466 billion, an increase of 2 percent over Q3 2018, said the Worldline report.

Google said that after learning its lessons from the India digital payments market, it has offered specific suggestions to the Fed Reserve to “support real-time low-value and high-value payments, use standardized messaging protocols with extended metadata, and provide clear standards for an Application Programming Interface (API) layer that enables licensed non-financial institution third parties to access and submit requests into this payment system.”