• India has emerged as the global leader in fast payments, according to a new report by the International Monetary Fund (IMF).

• At the heart of this transformation is the Unified Payments Interface (UPI), shows the report titled ‘Growing Retail Digital Payments: The Value of Interoperability’.

• Today, UPI accounts for 85 per cent of all digital transactions in India. Its impact goes beyond national borders, powering nearly 50 per cent of global real-time digital payments.

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. 

• UPI is an instant payments platform built over the Immediate Payment Service (IMPS) infrastructure, India’s pre-existing real-time interbank electronic fund transfer service.

• 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.

• A user seeking to make a payment can open an app and use that to make a transfer to a user of a different payments app. The NPCI, which runs UPI, sits in the middle and ensures that the payer’s and payee’s banks debit and credit the amount accordingly.

Growth of UPI

• UPI has transformed the digital payments landscape in India. 

• The UPI ecosystem has grown steadily, reaching more than 600 banks and more than 200 apps. 

• UPI now processes more than 18 billion transactions per month and dominates other electronic retail payments in India.

• In June 2025, UPI handled over Rs 24.03 lakh crore in payments. This was spread across 18.39 billion transactions. 

• Compared to the same month last year, when there were 13.88 billion transactions. There is an increase of about 32 per cent in just one year.

• The UPI system now serves 491 million individuals and 65 million merchants. 

• The UPI is also now the world’s number one real-time payment system. It has surpassed Visa to take the lead in processing daily transactions. UPI handles more than 640 million transactions every day, compared to Visa’s 639 million. 

UPI’s expansion into other countries

• 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.

• India is also pushing for UPI to become a standard within the BRICS group, which now has six new member nations. If this happens, it will improve remittances, boost financial inclusion and raise India’s profile as a global tech leader in digital payments.

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