By the time you read this, millions of Indians would have made a digital purchase that was simple, streamlined and absolutely free.
India’s Unified Payments Interface (UPI) has been quietly powering a revolution that’s been taking place across the country. It started in 2016 as a little digital banking experiment in a country that relies largely on cash. But it has become a model that is changing how people around the world think about the transfer of money.
The National Payments Corporation of India (NPCI) had quite modest expectations when it first rolled out the Unified Payments Interface (UPI). This was the effort of the Reserve Bank of India. It currently conducts more transactions than all the other major payment networks in the world combined, almost 18 billion transactions each and every month. In 2024, the Unified Payments Interface (UPI) was responsible for almost 80% of all digital payments in India’s retail space, totalling more than $2.5 trillion.
The system is defined by exquisite simplicity . The system comprises of a single mobile interface that links various bank accounts, facilitates real-time financial transfers round the clock and does not charge consumers anything . No credit card payments. There will be no waiting time. Your account does not have a minimum balance requirement. You require just a personal identification number (PIN), a UPI ID and a telephone number.
What decades of banking policy could not do, this basic design achieved: it instantly and effortlessly brought hundreds of millions of underbanked and unbanked Indians into the formal financial system.
At no time has there been any disrespect to the achievements of UPI. The UPI concept is being worked on and in some cases implemented by several countries around the world, including countries in Asia, Africa, the Middle East and Europe.
Indian tourists and expatriate populations can now transact directly in local currencies with their Indian UPI apps. This is enabled via the integration of UPI cross-border payment corridors in Singapore, Malaysia, Thailand and the United Arab Emirates. France has become the first European country to accept payments made via the Universal Payments Interface (UPI) as it has started accepting payments at the Eiffel Tower and other major tourist destinations.
So it’s no surprise that the Universal Payments Interface (UPI) shows that a real-time, interoperable payment rail may exist without Visa and Mastercard. But it is plausible that the government might develop it, that it could be available to the whole public, and that it could be global in scope.
Special attention must be paid to countries that are in the process of financial exclusion. The G20’s prioritisation of digital public infrastructure was centred on the United Progressive Infrastructure (UPI) in India’s presidency in 2023. The UPI model can let developing countries bypass traditional banks altogether, according to the International Monetary Fund and the World Bank.
But a closer examination reveals that the spectacular rise of UPI on a worldwide scale is anything but clear. International money transfers had until recently been based on the Western-controlled systems of wire transfers (SWIFT) and credit card transactions (Visa and Mastercard). And when a handful of powerful nations can exploit these networks to isolate entire economies, as the sanctions on Russia have shown. There are costs involved, and there are potential delays.
The international extension of the UPI is an alternative architecture relying on bilateral agreements between national banks. This architecture offers an alternative to using commercial intermediaries. India’s ties with nations like Bhutan, Sri Lanka, Nepal and Mauritius, and the Gulf states, have contributed to the creation of a parallel financial system in South Asia.
The objective is not to create disturbance. The issue here is independence. Countries under the UPI umbrella have more control over their financial flows, are less reliant on dollar-denominated systems and their residents pay less for transactions.
Besides this, UPI has been the cause of the rise of a domestic innovation economy that is affecting the global situation. Apps such as Paytm, Google Pay and PhonePe, based on the Unified Payments Interface (UPI), have made India the largest market for real-time payments, surpassing the United States of America, China and the European Union.
Many attempts have been made around the world and mostly impacted by the open API design that UPI has established. Pix’s initiation in Brazil in the year 2020 mirrors a substantial number of the guiding ideas of UPI. The United Kingdom, the European Union and Australia are all expediting their own rollouts, inspired by India’s real-time payment infrastructure.
There are some issues that can occur when using UPI. There is still much concern over concerns such as cybersecurity, the challenge of harmonising regulatory frameworks across borders and the absence of merchant acceptance in rural areas. “ The route the journey will follow, however, is immediately apparent.
In less than a decade India has built a public digital payments infrastructure that is quick, free, interoperable and exportable. This infrastructure is rapidly turning into one of the country’s biggest soft power exports. The Unified Payments Interface (UPI) is changing much more than how Indians pay. This is changing the way money is sent around the world.
How India’s UPI Is Transforming the Global Digital Payment Economy
