Impressed with the safety features of the blockchain technology, the National Payment Corporation of India has launched a blockchain-based payments platform called Vajra.
According to NPCI, the Vajra platform can be accessed by various payment companies for providing secured transactions on their online platforms or mobile applications. For easy incorporation of Vajra in payments systems operated by banks, NPCI will provide an application programming interface (API).
The newly launched platform, which is based on the Distributed Ledger Technology (DLT) has been designed for automating payment clearing and settlement processes of NPCI products such as unified payments interface (UPI) and Rupay card.
DLT is a distributed ledger account that facilitates secured transactions through a distributed and immutable database. The technology can be adapted to secure various payments methods. DLT also acts stores information for all transactions in hashed digital packets called blocks.
Notably, usage of DLT in payments will ensure minimal reconciliation of transactions, which will result in higher efficiencies through automation and transparency. All the transactions operated by the DLT follow real-time clearing and settlement. It also helps in reducing the overall charges incurred in operating transactions. Moreover, the transparency provided by the DLT platform also helps in easy tracking and resolving complaints.
In addition to securing payments, this blockchain-based technology will also help the Unique Identification Authority of India (UIDAI) in facilitating Aadhaar authentication.
How Vajra Facilitates Secured Payments
The blockchain-based payments platform uses cryptography security for the protection of data. Notably, cryptography is a technology which protects information by converting it into some codes, which can be accessed and read by only authorised entities.
The Vajra platform ensures privacy for transactions by encrypting them into digital signatures, thus preventing unauthorised entities from reading or corrupting transaction data.
Notably, the government has always remained against the usage of cryptocurrency, a form of digital money that uses blockchain technology for exchange. However, this time the government had adopted one of its features, which is to facilitate transactions via blockchain.
Moreover, the Reserve Bank of India (RBI) had shown interest in developing India’s own digital currency in India. At that time, the RBI said that it is thinking about developing a sovereign digital currency in the country and will be releasing it appropriately.