Twenty years ago, four Reserve Bank of India (RBI) officers went on a study tour to Sweden to experience of the Swedish payments system first-hand. They were impressed with what they saw at the Bankgirocentralen or BGC AB. BGC AB was set up by the leading banks of that country and had become a one-stop clearing house for retail payments and related services. The officers felt that a similar model that combined private initiative with public-spirited innovation might work for India.

This idea found expression in RBI’s 2005 vision document on payments. RBI should work jointly with the Indian Banks’ Association (IBA) to set up a retail payments platform, the vision document said. Despite resistance from some bankers, the idea gained ground. With leading banks as shareholders and then RBI governor YV Reddy’s blessings, the National Payments Corporation of India (NPCI) was set up in December 2008. The rest, as they say, is history.

After beginning operations in 2009, NPCI standardised the protocols for inter-bank fund transfers. In 2010, it launched the Immediate Payment System (IMPS), an instant retail payment service with round-the-clock availability. Prior to IMPS, transfers of funds across bank accounts (through the NEFT and RTGS systems) was processed in batches and at fixed operating hours. Digital banking was limited to high-value........

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