Monetary policy review: Soon, conversational payments on UPI using AI

India is about to embark on a new chapter in its instant payment system as the central bank has proposed the incorporation of conversational payments into the Unified Payments Interface (UPI) through artificial intelligence (AI).

The industry's swift embrace of this proposal underscores the potential for expediting the nationwide adoption of this digital platform.

Reserve Bank of India (RBI) Governor Shaktikanta Das said that talks are underway with several countries, including Japan, regarding UPI linkage.

Currently, India has such an arrangement with Singapore and has also solidified an agreement to link UPI with the Instant Payment Platform of the United Arab Emirates. This strategic move will facilitate prompt, convenient, secure, and cost-effective cross-border fund transfers.

During his monetary policy speech on Thursday on harnessing new technologies for enhancing the digital payments experience for users, Das announced RBI’s intention to introduce “conversational payments” on UPI, enabling users to interact with AI-powered systems for making payments.

Reports indicate that this conversational UPI payment feature will initially support Hindi and English, with plans to extend it to other Indian languages in the future. The National Payments Corporation of India is expected to issue guidelines on this matter soon.

According to Rahul Jain, chief financial officer at NTT DATA Payment Services, the introduction of AI in India will further push the Make in India initiative.

“The RBI’s proposal to introduce conversational payments through utilisation of AI on the UPI platform marks a transformative leap for India’s payment ecosystem,” he said.

Jain emphasised that this innovative approach will empower customers with seamless, transparent, and convenient payment solutions, streamlining transactions within a secure environment. He added that this not only underscores the potential of Make-in-India solutions gaining global recognition, particularly in technology-driven nations where AI is pervasive, but also highlights India’s pioneering role in the digital payments domain.

Pranay Jhaveri, managing director (MD) for India and South Asia at Euronet, affirmed, “This will undoubtedly harness innovative capabilities and bridge gaps to create a user-friendly and easy-to-use payment system. As a result, a substantial number of users will gravitate toward the digital platform, thereby accelerating its penetration across the nation.”

Governor Das emphasised that UPI has gained international recognition as one of the world’s most efficient and advanced payment systems, a sentiment shared during the recent Group of Twenty meeting of finance ministers and governors.

George Alexander Muthoot, MD of Muthoot Finance, noted, “As a digital-first non-banking financial company, we believe that these measures will further drive financial inclusion and enhance the adoption and utilisation of digital payments in India.”

Adelia Castelino, co-founder and MD of In-Solutions Global, welcomed the RBI’s proposal, stating, “This move represents a significant stride toward enhancing user experience and making digital payments even more convenient and accessible to a broader range of users.”