UPI routes 800 million payments a day and never holds a rupee

transcript

UPI routes about 800 million payments a day. And the switch in the middle never holds a single rupee.

800 million a day. Around the clock. No maintenance window. More than 740 banks. Money must move between any two. And 99 percent finish in under two seconds.

The obvious design: a central pot. Your bank pays in. The switch pays out. But if the switch fails, a whole country's money fails with it. And it must become the regulated money holder. Not a simple router. So UPI leaves the money where it already is. Banks debit and credit accounts in real time. Then they settle the net through the RBI. Several times a day. The switch? A stateless router plus a transaction log.

Follow the information. App, to switch, to both banks. Now follow the money. It moves bank to bank. Netted, and settled in batches through the RBI. Far fewer transfers. Not one rupee passes through the switch.

No money means no counterparty risk. Banks stay regulated. And the switch scales out like any stateless router. NPCI moves information. Banks move money.

Full breakdown in the lecture.