Unified Payments Interface (UPI) is an Indian instant payment system and protocol developed by the National Payments Corporation of India (NPCI) in April 11th 2016. The interface facilitates inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions. It is used on mobile devices to instantly transfer funds between two bank accounts using only a unique UPI ID. It runs as an open source application programming interface (API) on top of the Immediate Payment Service (IMPS), and is regulated by the Reserve Bank of India (RBI). Major Indian banks started making their UPI-enabled apps available to customers in August 2016, and the system is today supported by almost all Indian banks.
As of 2025, 50% of the world's digital transactions are conducted by India's UPI platform with over 250 billion annual transactions worth US$3.4 trillion.https://eacpm.gov.in/wp-content/uploads/2026/03/Financial-Inclusion-as-a-Path-to-Equality-Lessons-from-India.pdf UPI transactions hits record high In 2021, UPI in India had over 500 million active users. In the month of August 2025, 20 billion UPI transactions worth ₹ 25 trillion (about US$293 billion) were processed by the UPI system, processing an average of nearly 7,500 transactions every second. UPI is the largest real-time payment system in the world. it handles more than 640 million transactions every day, compared to Visa's 639 million. Furthermore, the successful execution of an instant payment system at such an enormous scale has made it a soft power tool for India and is often cited as the most transformative and successful financial technology innovation India has developed. As of 2025, UPI accounts for 84% of digital payments in India.
On 25th August 2026, UPI completed 10 years of functioning and was responsible for transactions worth ₹ 314 Trillion in FY 2025-26 representing an increase of more than 4000-fold since the year of its inception. In terms of number of transactions, there has been almost a 13000 fold increase in transactions with 241.62 billion transactions concluded in FY 2025–26.
History In April 2009, the National Payment Corporation of India (NPCI) was formed to integrate all the payment mechanisms in India and make them uniform for all retail payments. In March 2009, the Reserve Bank of India (RBI) reported an annual average of just six non-cash transactions per capita, despite over 10 million retailers accepting card-based payments. A parallel challenge was combating black money and corruption, which were primarily facilitated by cash transactions.
RBI released a vision statement in 2012 for a period of four years that indicated commitment towards building a safe, efficient, accessible, inclusive, interoperable, and authorized payment and settlement system in India. It was also part of the Green Initiative to decrease the usage of paper in the domestic payments market. UPI was officially launched in 2016 for public use. The pilot launch took place on 11 April 2016, inaugurated by Dr. Raghuram G. Rajan, Governor of the Reserve Bank of India, in Mumbai, with 21 member banks participating.
Under RBI guidance, NPCI became the primary body tasked with developing a new payment system which was simple, secure, and interoperable. UPI works on a four-pillar push-pull interoperable model where there will be a remitter/beneficiary front-end PSP (payment service provider) and a remitter/beneficiary back-end bank that settles the monetary transaction for the users. According to the CEO of Netmagic Solutions, UPI became one of the most successful deep-tech financial innovations India has produced.
In December 2019, noting the success of UPI, Google suggested that the US Federal Reserve Board should follow UPI as an example in developing FedNow, a real-time payment system for the United States.
With the exponential growth of UPI, India became the world's largest real-time payment market with 25.5 billion annual transactions in 2020 as per data from ACI Worldwide and GlobalData. This put the country ahead of China, South Korea, Thailand and the United Kingdom.
As per the Economist Intelligence Unit Report 2021, UPI has made India a leader in the global real-time payment market followed by China and South Korea. After the decision of the Ministry of Finance to nullify the merchant discount rate (MDR) in 2019 from UPI, the number of low value transactions skyrocketed, making huge gains on real-time transaction volume data. Countries such as Brazil, Bahrain, Saudi Arabia, Singapore, the United States, and the European Union are exploring options to implement a UPI-like system in their own domestic markets.
From 1 January 2019, UPI became a popular payment option for initial public offerings (IPOs). The transaction limit was enhanced from ₹ to ₹ in March 2020. From December 2021, RBI again increased the limit to ₹ for Retail Direct Scheme and IPO applications. To make UPI economically feasible for payment companies, RBI is considering a merchant discount rate (MDR) on future UPI transactions. In its first monetary policy for the 2022–23 financial year, RBI proposed a cardless cash withdrawal facility from ATMs using UPI-based QR codes. In partnership with the NSDL Payments Bank and NPCI, ToneTag launched VoiceSE, which will enable 40 crores (400 million) feature phone users to make UPI payments using voice in Hindi, Telugu, Tamil, Malayalam, Kannada, and Bengali languages.
According to Redseer Strategy Consultants, in 2023, UPI usage has expanded outside of metro areas. Currently, around 70% of UPI users are from places other than Tier-1 cities with over 80% of newly registered users originating from Tier-2 cities. On 8 August 2024, RBI suggested raising the UPI tax payment ceiling from ₹1 lakh to ₹5 lakh.
Professor Carlos Montes, Lead of the Innovation Hub for Prosperity at the Cambridge Judge Business School, argues that UPI gives other nations a chance to absorb knowledge from India's experience and get inspiration for implementing it in their own nations. The expansion of UPI demonstrates that the government is ensuring that the technology it creates for citizens is easy to use, easily accessible, and constantly improved, which accounts for the high rate of UPI acceptance in India. In 2025, UPI surpassed Visa in digital payments, according to the International Monetary Fund. Over 640 million transactions are handled via UPI per day, compared to 639 million by Visa.
UPI 2.0 On 16 August 2018, UPI 2.0 was launched, which enabled users to link their overdraft accounts to a UPI handle. Users were also able to pre-authorise transactions by issuing a mandate for a specific merchant. This version also included a feature to view and store an invoice for each transaction. An AutoPay facility for recurring payments was also added. As of August 2021, State Bank of India, Bank of Baroda and Paytm Payments Bank have been live on UPI AutoPay, each registering , , and mandates, respectively. From 15 March 2022, the government removed the need for debit cards for UPI registration. NPCI is planning to expand AutoPay to international markets and operationalize real-time payment dispute resolution mechanisms covering 90% of the complaints by September 2022.
From 8 June 2022, RBI allowed linking RuPay credit cards with UPI. Customers can now make credit card payments using UPI, in the absence of a physical card. NPCI developed a real-time feature that will reduce the 24-hour time period taken by banks to unblock funds over time-out or transaction declines to 30 seconds. The service was officially launched on 20 September 2022. On 7 December 2022, RBI announced that UPI will upgrade from single-block-single to single-block-multiple debit for recurring transactions and investments in securities. This feature is expected to help users block funds for specific purposes and release them when needed.
RBI on 6 April 2023 proposed allowing credit on UPI through pre-approved bank lines which would help customers reduce their dependence on credit cards. On its point-of-sale devices, Razorpay introduced a quick refund feature for UPI in 2024. Compared to the industry average of five to six business days, the reimbursement will be initiated within 2 minutes.
After introducing the first card-less UPI automated teller machine (ATM), Hitachi Payment Services is now working on creating a UPI-based cash recycler machine (CRM). It will operate on the opposite principle to UPI ATMs'. The RBI and the NPCI are collaborating with the company to explore the feasibility of permitting deposits based on UPI. On August 29, 2024, during the Global Fintech Fest, RBI Deputy Governor T Rabi Sankar introduced the UPI Interoperable Cash Deposit (UPI-ICD) feature for cash recycler machine.
In October 2024, the transactions using RuPay credit cards via UPI apps have doubled in the first seven months of FY25. It reached ₹63,825.80 crore—up from ₹33,439.24 crore in during the same period last fiscal.
International mobile numbers of ICICI Bank's non-resident Indian clients can be used to make UPI payments in India. In ten nations—the United States, United Kingdom, United Arab Emirates, Canada, Singapore, Australia, Hong Kong, Oman, Qatar, and Saudi Arabia—the bank provides this service.
UPI 123PAY As part of a financial inclusion initiative, NPCI, with fintech start-up Naffa Innovations and their product ToneTag, started working on developing a voice-based payment service for feature phone users in low connectivity zones over UPI payment ecosystem under Interactive Voice Response (IVR) project in 2021. The system utilised Dual Tone Multi-Frequency (DTMF) signalling technology with two-factor authentication (2FA) flow for peer-to-peer (P2P) transaction. From September 2020 to June 2021, it was under beta testing while awaiting RBI approval for large-scale deployment. The beta testing and pilot experiment were completed by October 2021 and RBI started formulating guidelines for nationwide use.
RBI governor Shaktikanta Das launched the service UPI 123PAY on 8 March 2022, with an aim to help almost 40 crores (400 million) feature phone users in the country. Until then, UPI payments were only possible through payment applications on smartphones and USSD-based service for feature phones. However, as per Deputy Governor T Rabi Shankar, the latter has been found to be cumbersome due to the unavailability of the services on several mobile networks.
UPI 123PAY has four options for payment.
App-based functionality where a mobile phone manufacturer can install a UPI app through over-the-air programming, that can be used for payment. Missed calls based: where a customer can use a dedicated merchant payment number by giving a missed call. The incoming authentication call will ask for PIN verification to complete the transaction. Interactive Voice Response (IVR) based where the payment transaction will be completed using pre-defined phone numbers. Payment in offline mode through sound-based proximity data communication. As per NPCI, some of the early use cases involve FASTag recharges, insurance payments, and EMI collections. As of 20 September 2022, Ultracash Technologies, in collaboration with Bharat Petroleum, helped 200,000 active users make LPG booking and payment through UPI 123PAY. As of October 9, 2024, the RBI increased the transaction limit from ₹5,000 to ₹10,000. Banks and service providers have until January 1, 2025, to make the required adjustments.
UPI 3.0 NPCI started introducing new features under UPI 3.0 from 2024.
Conversational Voice Payments At the Global Fintech Fest 2024, the National Payments Corporation of India (NPCI), Indian Railway Catering and Tourism Corporation (IRCTC), and CoRover introduced a feature described as "Conversational Voice Payments" for Unified Payments Interface (UPI).