Manya Rathore
Research expert covering India
UPI in India - statistics and facts
From vegetable vendors to local stores and high-end malls, digital payment-based QR codes have become omnipresent in India. The Unified Payment Interface or UPI has put India at the forefront of real-time payment transactions worldwide and accrued around 260 million users to date.
Launched in April 2016, by Dr. Raghuram Rajan, the then-governor of the Reserve Bank of India (RBI), UPI is a real-time payment system . It is regulated by the RBI and developed by the National Payments Corporation of India (NPCI) which allows users to link multiple bank accounts into one application merging various banking features, and enabling fund transfers, and merchant payments.
With a smartphone connected to the internet, and an active bank account linked to a mobile phone number, instant and secure digital payments are made by scanning a QR code. Currently, there are no transaction fees for UPI.
The large user base of UPI Payment Service Providers (PSPs) such as PhonePe, GooglePay, and Paytm has been crucial to its success. To address the challenge of growing market dominance by a few large app players, NPCI imposed a 30 percent market share limit on TPAPs (Third Party Application Providers) in 2020, however the compliance deadline has been extended to December 2024.
UPI 123 for payments without an internet connection, UPI Lite for low-value transactions, and UPI-Credit card Linkage are some of the upcoming trends redefining the fast-growing UPI digital payment landscape.
As a form of tech diplomacy, NPCI set up NPCI International Payments Limited (NIPL) with the purpose of exporting UPI architecture internationally. On the geopolitical front, it is being proposed as a viable option against dependence and dominance of the global payment system SWIFT (Society for Worldwide Interbank Financial Telecommunications). If India’s home-grown SWIFT alternative can replicate the domestic success globally is yet to be seen.
The expansion of real-time payment ecosystem in India
Introduced in the wake of demonetization in 2016, and further pushed by COVID-19 three years later, UPI has become a key platform for various other associated financial services such as expense tracking, budgeting, investing, and saving. The high adoption rate by banks, fintech, and telecommunication companies has accelerated the growth of the UPI ecosystem, now accounting for more than half of digital payments share in India in the financial year 2023.The large user base of UPI Payment Service Providers (PSPs) such as PhonePe, GooglePay, and Paytm has been crucial to its success. To address the challenge of growing market dominance by a few large app players, NPCI imposed a 30 percent market share limit on TPAPs (Third Party Application Providers) in 2020, however the compliance deadline has been extended to December 2024.
UPI 123 for payments without an internet connection, UPI Lite for low-value transactions, and UPI-Credit card Linkage are some of the upcoming trends redefining the fast-growing UPI digital payment landscape.
UPI goes global
The domestic success of UPI is paving the way for its global expansion. India is the world’s leading remittance market in terms of inflows, and it is currently working out agreements with countries from where the Indian diaspora sends the most money. This way, it is already present in some form in countries like UAE, Mauritius, Nepal, Singapore, France, the United Kingdom, and Bhutan among others. Worldline, a global leader in payment services collaborated with NPCI to expand UPI and other Indian digital payment means across Europe, considering India is one of the most important tourist markets for Europe.As a form of tech diplomacy, NPCI set up NPCI International Payments Limited (NIPL) with the purpose of exporting UPI architecture internationally. On the geopolitical front, it is being proposed as a viable option against dependence and dominance of the global payment system SWIFT (Society for Worldwide Interbank Financial Telecommunications). If India’s home-grown SWIFT alternative can replicate the domestic success globally is yet to be seen.
