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Comment by jesuswasjew | Hacker News Reader

Centralized, kyced, private money transaction network. Is this something good?

It’s extremely good, at least in terms of user experience and how practical it is. Adoption is massive and at small chai shops it makes transactions a breeze, allowing businesses to serve more volume. The downside is making it incredibly frustrating for foreigners to pay using this as it’s tied to your government ID that your bank has authorized.

I mean it's not like foreigners are blocked from using cash at those stores. And if they prefer cards, it's not like the stores that used to accept them stopped accepting them.

Most places will not have change so you need to carry exact cash change all the time. And many are indeed stopping using cards and switching to UPI as the fees are much less, unless they are particularly foreigner friendly, like a hotel in a tier 1 city.

In fact, card acceptance has gone _up_ in my experience. Unless you're using a very small shop which just has a QR code, most businesses now use a POS which supports a lot of payment methods including cards.

I agree that a lot of businesses now actively don't manage cash as they used to earlier... it's very difficult to get low-value notes as the central bank seems to be slowly reducing the supply by not printing as per demand.

> card acceptance has gone _up_ in my experience.

Yes acceptance may have gone up, but I think thats a side effect of normalizing digital transactions popularized by UPI.

Card acceptance may be up (I can't comment one way or another) but last I was in India, a large number of POS seem to straight up block international Credit Cards.

Yep, international/amex cards aren't enabled by default by most POS providers (_due to the high fees on the merchant side_) and most small businesses don't really know or care enough to enable them.

Funny story… I was on a trip to Europe (Poland) using my US credit card that didn’t have tap to pay or chip and pin (I believe it was swipe only) and the store literally did not have a way to accept payment and I had no cash on hand.

They were nice enough and gave the pastry for free because they tried everything to charge the card but it didn’t work. They were embarrassed about the whole thing and were just like… please leave.

I'm not sure whether this is fully correct - most card machines do have a way to accept swiping, but I think the store did not know of it (because no one uses it in Europe). Perhaps if you remember the provider, I could check it, but most machines still accept swiping, which is innocuously placed on the side of the machine.

That being said, the US is a dinosaur when it comes to payments.

Haha I appreciate your offer for checking but this was like a decade ago. I figured the teenagers working that shop had no idea! And agreed on being the dinosaur :)

I was in India in December 2024 and visited three states. I experienced no problem in using my credit card. For smaller amounts I simply used cash. Altogether I spent less than Rs 1,000 in cash mostly for tea. In all other places a credit card was fine.

It is practical. When mobile wallets was taking off a lot of people starting pitching "blockchain technogloy" in fintech and said decentralization needs to be the foundation for everything. The whole process largely become about technogical philosophical discussion about decentralization, p2p, intermediate crypto transactions, stablecoins etc. A lot of consulting firms made a shit ton of money while at the end of the government agencies and banks was scratching their head trying to find out how they "invested" millions without an iota of progress in terms of product development. The conclusion largely was fintech innovation should not be led with governments.

If you look at very large scale IT infrastructure engineering, a lot of times those technologies are developed and sold to governments by US or west EU government controled or influenced companies that does impose to some degree to the sovereignty aspect of a government.

So, with decentralization discussion most government lost a ton of money to consultants. They could wait for to buy off the shelf software that comes control risk. Or they could accept the risk and limitations and build a software that works now.

I think india made the right choice to build a system on framework that is proven and predicatable.

way better than privately owned banks doing the same while extracting profits from users. better than todays crypto with terrible ux where its easy to lose all your money. more practical than cash (but that should still be an option).

worse than a system thats convenient and decentralized and anonymous at the same time, but we dont have one yet. maybe in 5 years when ethereum figures out native account abstraction, seamless scaling and monero level privacy.

Centralized and KYCd, yes. Private? Not really. See https://www.bankbazaar.com/tax/tax-on-upi-transactions.html

Yes it is. It's not trying to be new money, it's your money that already works.

KYC and centralisation means govt will promise your money is there. These are essential for dev country or 3rd world. Even with so much kyc often there are fraud. This has minimised fraud.

If you are looking for RMS style freedom etc then look elsewhere. This is not Iceland or Nordic.

One another overlooked issue is India was the largest printer of currency. Until UPI etc modernisation - lots of torn currency - usually caused arguments/inconveniences among population. Also often shopkeepers or transport agencies did not return proper money change upon payment.

Irrespective of privacy, now it take few seconds to pay. Just works. Even without NFC. No worry about return change.

We've seen basically every country in the world make promises and break them. Right now your money is there, but give it less than 10 years until someone is decided to be a terrorist based on their transaction pattern, and all of their money is taken away.

Agree to your point. But the hawker in street in India wants to get paid or he or she cannot eat next day. And if majority say they will use UPI/online payments - they accept.

Do you live there? Every other shop will avoid paying you change including govt offices. While that should be resolved properly they did this workaround using online? Not perfect.

> We've seen basically every country in the world make promises and break them.

I sincerely hope you change the world.

That's how government money works. This is the best possible system for handling government money. If you want an alternative you could buy some bitcoin with it.

Yes, it is peak developed world financial infrastructure, ran as a utility under government direction.

I have heard nothing but good about it, from my Indian friends. They rave about it.

> Is this something good?

All good for a central bank digital currency (CBDC) and for creating the digital rupee.

Horrible for your bank account.

> Horrible for your bank account

Why? Are you saying that people spend much more because upi has made spending so easy?

It's the CBDC that govts lust for.

If CBDC means this, I have bad news for you about every other country.

How is it KYCd yet also private?

It's the intention and use case. The government want to reduce the fund leakages and reduce corruption, directly transfer the money to citizens, reduce transaction costs. Hence it works.

The government does not track all the transactions. You need a police FIR, to review these transactions.

In short, Indian government does not track or they don't have the scaling to track. But they can do it, if there is any criminal complaint.

> In short, Indian government does not track or they don't have the scaling to track

This is completely wrong.

Not only can the Indian govt track each these transactions, it's actually written into law via the 'anti money laundering' bill (PMLA) and the income tax act. For a very high level overview, see https://www.bankbazaar.com/tax/tax-on-upi-transactions.html

From the article

'Can the Income Tax Department Track Your UPI Transactions?

Yes. With the integration of PAN, Aadhaar, and Know Your Customer (KYC) via all banking and fintech channels, all your UPI transactions can be tracked. If you think your small-value digital transfers won't be traced, you are mistaken. UPI payments are directly linked to your bank account, and bank records can be obtained by tax officers through scrutiny or reassessment.'

Specifically, no complaint or warrants are needed to enable access to UPI transaction records.

Yeah globemaster99's point seems very naive.

> You need a police FIR, to review these transactions.

In India, if you even have a small power you can easily review any transactions...

I think OP meant network is private. That also is wrong, it is semi govt.

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