• Transactions through the popular Unified Payments Interface (UPI) recorded a growth of 5 per cent in May compared to the previous month and touched a new high of Rs 25.14 lakh crore, according to data released by the National Payments Corporation of India (NPCI).

• The UPI is an instant real-time payment system developed by NPCI to facilitate inter-bank transactions through mobile phones.

• The UPI transaction value was Rs 23.94 lakh crore in April.

• It also represents a significant 23 per cent year-on-year growth from Rs 20.45 lakh crore in May 2024.

• In terms of volume, 1,867.7 crore transactions were done in May against 1,789.3 crore in the previous month.

• The daily transactions during the month averaged Rs 81,106 crore, up 1.5 per cent from April's level of Rs 79,831 crore. 

What is Unified Payments Interface (UPI)?

• Before 2016, India used a number of different systems to transfer money between banks. The traditional forms included National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS). With the plethora of systems, rules and growing paper burden, there was a need for a unified system that could automate and standardise India’s payment platforms.

• In 2016, the National Payments Corporation of India (NPCI) set out with a mandate to change the face of India’s payment systems. It developed the Unified Payments Interface (UPI) as an architecture framework with a set of standard Application Programming Interface (API) specifications to facilitate online payments. 

• The aim was to simplify and provide a single interface across all NPCI systems, thereby creating interoperability and a superior customer experience.

• The pilot programme, with 21 member banks, was launched on April 11, 2016.

• The UPI is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing and merchant payments into one hood. 

• It also caters to the “peer to peer” collect request which can be scheduled and paid as per requirement and convenience. 

• It facilitates immediate money transfer through mobile devices round the clock.

• In its 2024-25 annual report, the Reserve Bank of India (RBI) highlighted how UPI’s success has positioned India as a global leader in real-time payments, accounting for nearly half (48.5 per cent) of worldwide real-time digital transactions.

• The RBI has a goal of taking UPI to 20 countries with a completion timeline of 2028-29 and has been facilitating the global outreach of expanding the footprint of UPI as well as the RuPay cards.

• Acceptance of India’s UPI apps via QR code has been operationalised in Bhutan, France, Mauritius, Nepal, Singapore, Sri Lanka, and the UAE, which enables Indian tourists, students, and business travellers in other countries to make payments to merchants using their Indian UPI apps.

National Payments Corporation of India

• National Payments Corporation of India (NPCI) was incorporated in 2008 as an umbrella organisation for operating retail payments and settlement systems in India.

• It is an initiative of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India.  

• Considering the utility nature of the objects of NPCI, it has been incorporated as a “Not for Profit” company, with an intention to provide infrastructure to the entire banking system in India for physical as well as electronic payment and settlement systems. 

• The company is focused on bringing innovations in the retail payment systems through the use of technology for achieving greater efficiency in operations and widening the reach of payment systems.

• NPCI is focused on bringing innovations in the retail payment systems through the use of technology and is working to transform India into a digital economy. It is facilitating secure payment solutions with nationwide accessibility at minimal cost in furtherance of India’s aspiration to be a fully digital society.

• NPCI International Payments Limited (NIPL) was incorporated on April 3, 2020, as a wholly-owned subsidiary of NPCI. As the international arm of NPCI, NIPL is devoted for deployment of NPCI’s indigenous, successful real-time payment system — UPI, and card scheme – RuPay, outside of India.

(The author is a trainer for Civil Services aspirants.)