How UPI Is Revolutionising Retail Payments In India And Beyond

India has seen a revolution in digital payments over the past decade. At present, India dominates the global real-time payments space with almost 130 billion real-time payments made in 2023, accounting for 49% of total global real-time transactions in the world.

This success is built primarily on the Unified Payments Interface (UPI), India’s mobile-based real-time payment system, which enables instant personal and merchant payments. Processing around 80% of the country’s retail digital payments, UPI has emerged as a transformative force in India’s financial landscape, revolutionising how people transact with money. In August 2024 alone, UPI has registered nearly 15 billion transactions with a value of USD 245 billion.

UPI represents a collaborative effort by various stakeholders, including banks, fintech companies, government agencies, and consumers. Its success can be attributed to the Indian government’s vision of transforming the country into a digitally empowered society, the Reserve Bank of India (RBI’s) forward-thinking, progressive approach towards payments and financial technology, and the collaborative efforts at the eco-system level.

UPI offers an open architecture framework with a set of standard Application Programming Interfaces (APIs) that facilitate easy integration. Its interoperability enhances financial access, and its real-time capabilities ensure swift fund transfers. Moreover, National Payments Corporation of India (NPCI), the developer of UPI, employs a cost-effective merchant-deployment model that supports merchant network expansion.

The UPI ecosystem features many mobile applications, including multiple third-party application providers (TPAPs) like Google Pay, WhatsApp, Amazon Pay, PhonePe (Walmart-backed), apart from the BHIM app. Additionally, the UPI framework integrates more than 550 banks, thereby enhancing its extensive reach and utility.

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UPI enables person-to-person (P2P) and person-to-merchant (P2M) transactions via phones, offering an efficient and seamless payment method. It allows users to conveniently make utility bill payments, over-the-counter (OTC) payments, and QR Code (Scan and Pay) payments. For merchants, it simplifies the collection process by reducing the need to handle large amounts of cash or store sensitive customer information.

To meet the broader needs of the population, NPCI has expanded UPI’s functionality by introducing features like UPI LITE X, which offers wallet-like features enabling offline payments, UPI 123PAY, which allows UPI payments via feature phones, and Hello! UPI with AI-based conversational payments abilities.

These features, through their various use-cases, address the diverse levels of financial literacy and access to technology across India. Thus, enabling a ‘less cash’ society, where every citizen, regardless of location or background, has access to secure and seamless digital payments.

Following its success in India, NPCI is taking UPI abroad through its international arm, NPCI International Payments Limited (NIPL). NIPL is committed to advancing India’s digital public goods across the globe, working with foreign central banks and governments to help develop sovereign, interoperable, and robust real-time payment system like UPI. The organisation has already partnered with the Bank of Namibia and the Central Bank of Peru to enable deployment of UPI like system in Namibia and Peru, respectively.

In addition to this, it is also working to offer Non-Resident Indians (NRIs) and outbound travellers with a seamless, real-time access to UPI by facilitating cross-border P2P payments and P2M remittances. Merchant payments via UPI are already live in seven countries, including France, the UAE, Singapore, Sri Lanka, Mauritius, Bhutan, and Nepal.

UPI, as more than just a convenience, serves as a powerful engine of economic empowerment, promoting financial inclusion both domestically and internationally. UPI has democratised access to digital payments, bringing millions of individuals and businesses into the formal financial system.