Unified Payments Interface (UPI), which is an instant payment system owned by the National Payments Corporation of India (NPCI), crossed one billion transactions in October 2019. UPI is an easy money transferring mechanism which has become a convenient alternative for the IMPS system. The craze of UPI transactions in India is on a boom; however, India still has to adopt the upgraded digital payment systems that other countries are effectively implementing already.
We already know that blockchain technology presents use cases across the sectors, including healthcare, supply chain management, transportation, and so on. And blockchain for online payments is not an exception. Though the Indian government has always opposed the adoption of cryptocurrency to make digital payment exchanges, the government has incorporated this feature of facilitating transactions via blockchain. This logical approach of the government to adopt the blockchain technology has opened up a huge opportunity for the blockchain development companies.
Moreover, the RBI (Reserve Bank of India) is showing interest in launching India’s own digital currency. The RBI is planning for the development of a sovereign digital currency in the country and has done several internal meetings and discussions with central banks regarding the launch of a new cryptocurrency.
Understanding the necessity of a new paradigm in the banking system, India and NCPI are adopting the blockchain-based online payment making mechanism. Vajra is a self-designed blockchain-based system adopted by NPCI. As blockchain technology provides the best safety features, Vajra has been designed to facilitate the process of payment clearing and settlement of NPCI products.
The use of cryptography security in the Vajra platform secures the stored data. As cryptography protects the data by converting it into codes, these codes are accessible only for the authorized entities. Vajra is a licensed platform based on blockchain resulting; only an authenticated party registered under network administrator can access the blockchain systems. It encrypts the transactions into digital signatures to ensure the transaction is secured. This does not let unauthenticated parties access or read the data. Vajra strongly facilitates transparency in real-time transactions, takes minimal time for the clearing process, settlement cycle, and processing of activities like reconciliation and reporting. It is built on Distributed Ledger Technology (DLT) that helps various payment companies to provide highly secured and tamper-evident transactions on their cross-platform applications. DLT provides secured transactions with its distributed and immutable database. DLT stores details of all the secured transactions in digital packets called “blocks.”
With the authorized blockchain network, Vajra helps NPCI to break-down the unrelated parties that are involved in the payment clearing and settlement cycle. Vajra also helps in detecting frauds using and ML, which will soon be executed against ledger data. Moreover, Vajra frameworks take minimal processing time and cater to faster decisions over the disputes that occurred. In order to improve the safety of transactions, it implements cryptography.
Vajra works on the following mechanism (stepwise):
The NPCI’s main aim behind the launch of the Vajra is to bring cryptography security and faster transactions to the Indian payment system. The main advantage of Vajra is that it minimizes the processing time and fastens the dispute resolution. Vajra provides high security to the credentials used in local payment transactions. This blockchain platform deals with issues like technical errors, declining to conduct business and transaction processing.
Key benefits of Vajra:
As the Indian government is trying to integrate blockchain technology in the Indian payment system to provide the secured transactions, NPCI marks its first step towards the launch of a licensed blockchain-based platform called Vajra. Vajra is designed to fasten the process of payment clearing and settlement of NPCI products. It provides a high amount of security to the transactions as only the registered entities on the network can access the platform.