Special Service and Features
India’s UPI : A global front-runner indigital payment systems
Posted On: 30 OCT 2023 5:03PM by PIB Thiruvananthpuram
If there is one Indian innovation that has grabbed global headlines in recent years, it is undoubtedly the UPI (Unified Payments Interface) payments system. Today, more than 40% of all payments done in India are digital, with UPI having a lion’s share, used by over 30 crore individuals and over 5 crore merchants.
UPI is used at all levels from street vendors to large shopping malls. Today, among all countries in the world, India is the country with the highest digital transaction, accounting for nearly 46% share, as per the 2022 data. India is followed by Brazil, China, Thailand and South Korea. From just one million transactions in 2016, UPI has since crossed the landmark 10 billion (1,000 crores) transactions.
The greatest change that UPI has brought about is in the way Indians transact. According to Global Data research, cash transactions have declined from 90 per cent of the total volume in 2017 to less than 60 per cent. Within six months after Rs 500 and Rs 1000 notes were phased out in 2016, the total transaction volume on UPI rose from 2.9 million to 72 million. By the end of 2017, UPI transactions had grown by 900 per cent compared to the previous year, and it has continued its growth trajectory ever since.
UPI is incredibly user-friendly. It allows users to make payments by simply using a Virtual Payment Address (VPA), eliminating the need to share sensitive bank details. The process is as simple as sending a text message on a smart phone. Its impact extends beyond convenience, contributing to financial inclusion, transparency, and the reduction of the informal economy.
UPI’s growth has not just led to the displacement of cash for payments in a significant way but also displaced other digital payment methods. For instance, the use of Debit Cards for merchant payments has been declining year on year, and UPI has also changed how prepaid wallets are accessed today. As UPI continues to evolve and innovate, it is likely to play an even more significant role in shaping India's digital future.
The success of the digital payment system, however, lies not just in the robustness of the digital payment infrastructure but also in the behavioural nudge that encouraged people to switch from cash to digital. Like any behavioural change, it had to be based on trust and accessibility of the system through insightful innovations that ensure its relevance to its core group. These include small and interesting innovations like small voice boxes provided by payment apps, where a Siri-like voice declares how much money has been instantly received with each payment by QR code. This has helped bridge mistrust among small merchants and street vendors, long used to cash transactions.
Another key design element has been to offer the customer a choice of the service provider for UPI, irrespective of in which bank the customer holds his account. The power of choice has meant that customers can choose their preferred payment apps to access UPI for payments.
The integration of RuPay credit cards with UPI marks a revolutionary step in the digital payments landscape, combining the advantages of both credit cards and UPI for consumers. By taking advantage of the short-term credit facility offered by credit cards for UPI transactions, cardholders can now initiate payments using their credit lines instead of drawing from their savings accounts.
India’s robust digital payment ecosystem is attracting worldwide attention. Following UPI’s local success, the National Payments Corporation of India (NPCI) set up an arm called NIPL (NPCI International Payments Limited) in 2020 to take the payments system outside the country. Since then, NIPL and the Reserve Bank of India (RBI) have entered into agreements with financial entities in over 30 nations to expand UPI-based transactions beyond India’s borders. In the recent past, France, UAE and Sri Lanka have joined the UPI bandwagon. UPI's entry into France is significant, helping it get a foothold in Europe for the first time. PM Modi has pitched for UPI's expansion into the BRICS grouping, which now has six new member states.
From a modest beginning in 2016, UPI’s phenomenal adoption and acceptance today is a one-of-a-kind story that is unmatched when it comes to its scale and impact.
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FAQs
A report by FXC Intelligence has highlighted the significant impact of India's Unified Payments Interface (UPI) on cross-border payments, signaling the country's emergence as a global economic leader and a frontrunner in digital payments innovation.
What is the share of UPI in digital payments in India? ›
UPI's share in digital payments reached nearly 80% in 2023 and is the biggest contributor to the growth of digital payments in India. Retail digital payments in India grew significantly, and UPI transactions are expected to cross 100 crore per day.
Why is UPI not in the USA? ›
Instant payments haven't taken off in the United States yet. That's in part because the US economy is card-based. Banks make a lot of money on interchange fees and late payments, which means it's difficult to sacrifice profitable credit and debit cards for free instant payments.
How many countries use India's UPI? ›
Indians can now use the Unified Payments Interface (UPI) to make payments in seven countries. Following its launch in Sri Lanka and Mauritius, UPI payments are accepted in France, UAE, Singapore, Bhutan, and Nepal.
Is India the only country to use UPI? ›
UPI services continue to expand globally, strengthening cross-border connections. Sri Lanka, Mauritius, Bhutan, Oman, France, and Southeast Asian countries already support UPI. Nepal, UAE, and plans are underway to introduce UPI services in the UK, Australia, European nations, and the US.
Is India the only country with UPI? ›
Overseas markets accepting UPI payments include Singapore, Malaysia, UAE, France, Nepal, UK, Mauritius, Sri Lanka, to name a few. India is making significant strides in expanding the network of its digital payment systems like RuPay, UPI (Unified Payments Interface), etc.
Which country use UPI other than India? ›
India's UPI has gained global traction with initiatives in Bhutan, UAE, Malaysia, Singapore, and others. UPI collaborations extend to regions like Europe, Japan, and the US, fostering cross-border transactions.
Which country has the highest digital payment system in the world? ›
India has topped the list for digital payments and recorded 89.5 million transactions in 2022, according to a report. Interestingly, India's payments are more than the digital payments made in the next four leading countries combined.
How does UPI India make money? ›
How do UPI Mobile payments firms make money? Commission income: All of these businesses have agreements with brands for a brand placement fee and with providers of everyday necessities like cellphone recharge, bill payment, DTH activation, etc. for commissions on spending.
Is UPI valid in USA? ›
The NPCI has enabled UPI transactions from mobile numbers including USA, UK, Singapore, UAE and Australia. Non-resident account types like NRE/NRO that have international mobile numbers will now be allowed to transact with UPI, according to a notice by the National Payments Corporation of India (NPCI).
UPI (Unified Payments Interface) is a real-time payment system developed by the National Payments Corporation of India (NPCI) that enables instant money transfers between bank accounts in India. UPI is currently designed only for domestic transactions within India, and it cannot be used for international transactions.
Can we do UPI from USA? ›
Yes, fortunately for you, you can send money via UPI to India from the US. Currently, the National Payments Corporation of India (NPCI) allows international UPI transfers to India from the following countries: United States. Singapore.
What is the UPI equivalent in the US? ›
FedNow, on the other hand, is owned and operated by the Federal Reserve, which is the central bank of the United States and works on profit. Geographic Coverage: UPI is a payment system used exclusively in India, while FedNow is a payment system used exclusively in the United States.
Does China have UPI? ›
CUP is a payment method from China. Other names of the methods are China UnionPay or UPI (for international payments) or simply UnionPay. It was founded in 20020. Basically, UnionPay is the biggest card scheme in mainland China.
Who invented UPI in India? ›
The Reserve Bank of India (RBI) and the Indian Banks' Association formed the National Payments Corporation of India (NPCI), which developed the Unified Payments Interface (UPI). UPI is an instant real-time payment system. The interface makes it possible to conduct P2P and P2M transactions between banks.
Which is India leading digital payment company? ›
Paytm is one of India's leading full-stack payments & financial solution provider. It offers services for consumers, offline merchants, and other online platforms.
Which is the largest digital payment company in India? ›
Premium Web / Digital Agency and White Label…
- PayPal India.
- PayU.
- Paytm.
- CCAvenue.
- Razorpay.
- IppoPay.
- Instamojo.
- Cashfree.
The Reserve Bank of India (RBI) as the central bank of India has been playing this developmental role and has taken several initiatives for Safe, Secure, Sound, Efficient, Accessible and Authorised payment systems in the country.
Which is the largest digital payment app in India? ›
Paytm is the largest in terms of users and transactions, however, PhonePe and Google Pay process more UPI payments. Apple Pay and Google Pay are the two global payment solutions, with Samsung Pay a distant third.
