US lawmakers cite India's UPI model in payments reform debate
Washington, June 25
US lawmakers debating the future of the country's payment system pointed to India's Unified Payments Interface as an example of how modern public payment infrastructure can drive private-sector innovation, as fintech firms urged Congress to overhaul regulations governing access to America's payment network.
The comparisons with India came during a hearing of the House Financial Services Committee's Subcommittee on Financial Institutions on Wednesday (local time), where lawmakers examined whether the United States should modernise its regulatory framework to give qualified non-bank payment companies direct access to the Federal Reserve's payment infrastructure instead of relying on traditional banking intermediaries.
Eileen O'Mara, Vice Chair at Stripe, told lawmakers that countries that have opened access to payment infrastructure have seen significant innovation, citing both Brazil and India.
"The UK did it in 2017, the EU in 24, and the results are real," she said, before adding: "We saw the very same thing happen with UPI in India on an even larger scale."
She argued that although the United States has the FedNow instant payment system, "it lacks a product layer on top -- exactly what payment companies like Stripe would build, with the direct access that could drive significant adoption."
Congresswoman Rashida Tlaib highlighted India's digital payments success. Referring to UPI, she noted that it is operated by the National Payments Corporation of India and processes billions of transactions each month.
She contrasted that with the US system, saying the achievements of India and Brazil demonstrated that "large-scale payment systems offering free instant transactions" are already a reality for millions of users.
Much of the hearing focused on whether the United States should create a dedicated federal payments charter allowing regulated fintech companies such as Stripe to access Federal Reserve payment rails directly, rather than operating through a patchwork of state licenses and banking partners.
O'Mara said the existing framework was designed around whether a company is "a bank or you're not a bank", while payment firms operate under a different business model.
"We do not take deposits, and we do not lend," she said. "What we're advocating for is that we are regulated for the business and activity that we do, which is payment processing."
Tara Flynn of the National Community Reinvestment Coalition also urged lawmakers to ensure that any non-bank receiving access to the banking and payments system should be subject to strong consumer protections, community investment obligations and rigorous regulatory supervision.
The hearing reflected a broader debate in Washington over how to modernise America's payment infrastructure without weakening safeguards built into the traditional banking system. Members from both parties agreed that faster, more efficient payments are becoming increasingly important as digital commerce expands, but differed on how far access to the Federal Reserve's payment system should be extended.
— IANS
Reader Comments
As someone who uses both Indian UPI and US payment systems, the difference is night and day. In India, I can pay a street vendor instantly with zero fees. In the US, I'm still dealing with checks and 2-3 day transfers. The US really does need its own UPI-style system. 🇮🇳🇺🇸
Very proud moment for India! But let's not forget the privacy concerns. UPI has been a game-changer, but we need stronger data protection laws like the DPDP Act 2023 to be fully implemented. Without proper safeguards, increased digital payments could lead to surveillance and data misuse. Important for US to learn from both our successes and mistakes.
Interesting how Stripe is pushing for direct access to Fed payment rails. In India, we've seen both benefits and challenges with non-bank players. The key is getting the regulatory framework right - consumer protection, cybersecurity, and financial stability must be prioritized. Our RBI has done a good job balancing innovation with safety. 👍
Just imagine - in Delhi, my 70-year-old mother uses UPI to buy vegetables. In America, people still get confused between Venmo and Zelle. We've truly leapfrogged the West in payments technology. But we must also acknowledge the digital divide - not everyone in India has a smartphone or internet access. Let's work on that too.
While it's great that US is learning from us, I wish Indian policymakers would focus on improving our own infrastructure - frequent UPI downtime during peak hours, issues with transaction failures, and lack of interoperability for international
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