According to a latest International Monetary Fund (IMF) report, India’s UPI is the largest real-time payment system in the world by volume
Dasarathi Mishra
Unified Payments Interface – popularly known as UPI – has taken unique space in the payment ecosystem of the country. It is an instant payment system developed by the National Payments Corporation of India (NPCI), an RBI regulated entity.
Launched in 2016, UPI is now ubiquitous and has emerged as the most popular retail payment system. Ranging from small market places, to malls, airports, railway stations, citizens are adept to do the retail payment through UPI, with utmost ease and confidence. Who does not know BHIM, Google Pay, Amazon Pay, BharatPe, PhonePe etc? As on date, there are 37 such apps available for citizens to make instant payments using UPI system.
According to a latest International Monetary Fund (IMF) report, India’s UPI is the largest real-time payment system in the world by volume. In August 2025, it scaled new heights with more than 20 billion transactions aggregating rupees 24.85 lakh crore, which is a stellar achievement within a short span.
Payment system in India is regulated by RBI under Payments and Settlement System Act, 2007. After the demonetization in November 2016, one of the immediate objectives of UPI was to replace cash for low-value, high volume transactions. The objective is eminently achieved.
It may be recalled that on 11 April 2016, NPCI conducted a pilot launch of UPI with 21 member banks in the presence of Dr Raghuram Rajan, Governor of RBI and Nandan Nilekani one of the pioneers in the IT in the country. Dr Rajan described UPI system to be the ‘most sophisticated public platform on payments in the world’. Nilekani mentioned it as a ‘revolution round the corner’. Banks started uploading their UPI-enabled apps on Google Play Store from 25 August 2016 onwards. This was a historic step.
NPCI data shows that, from just 21 banks with 9 lakh transactions and Rs 3.09 Crore value as on August 2016, UPI has gone up to encompass 688 banks (public, private sector, foreign banks, RRBs, LABs, cooperative banks, urban cooperative banks) as on 31 August 2025.
On customer front, UPI is a payment system through which one can link one’s bank account to a mobile app and make transactions safely. UPI is very safe and secure platform being used for P-to-P, bill payments, online shopping, payment of travel bills, fuel stations, railway stations, merchant payments, and for IPO payments etc. As an essential service, it is available 24×7 and helped citizens a lot during the Covid pandemic.
UPI transaction involves a payer initiating a payment through their app, which is sent to the NPCI via their Payment Service Provider (PSP). The NPCI validates the transaction and directs it to the payee’s bank for credit, while debiting the payer’s bank. The process includes authorization with a UPI PIN and instant settlement through the NPCI network.
Over time, UPI has also become a popular payment option for initial public offerings (IPOs) since its availability from 1 January 2019. The transaction limit in the UPI system was enhanced from ₹ 1,00,000 to ₹2,00,000 in March 2020 and further to ₹5,00,000 in December 2021.
According to RBI Annual Report 2023-24, the scope of UPI was expanded by enabling transfer to/from pre-sanctioned credit lines at banks in addition to deposit accounts. In other words, UPI network will facilitate payments financed by credit from banks. This can reduce the cost of such offerings and help in development of unique products for Indian markets.
There are a few interesting observations on UPI flagged by Subash Misra, author of an article ‘We love both Cash and UPI’ published in a local newspaper recently:
- The volume of UPI transactions has risen from 2 crores in 2016-17 to 2,233 crores in 2020-21 and further to 18,536 crores in 2024-25.
- Value-wise the transactions recorded Rs 0.1 lakh crore in 2016-17 to Rs 201 lakh crore in 2024-25.
- UPI intensity in India is strong in Andhra Pradesh, Karnataka, Delhi, Maharashtra and Telangana.
- 80 per cent UPI transactions have taken place in 10 relatively advanced states with higher digital literacy.
Some more points are:
- While UPI adoption is widespread in urban areas, rural regions still lag behind due to various challenges. According to recent data, states like Maharashtra, Karnataka, and Tamil Nadu dominate UPI transactions, whereas rural areas face difficulties in adopting digital payments.
Regions with lower UPI adoption are:
- Tier-3 to tier-6 cities: These areas often lack reliable internet connectivity and digital infrastructure.
- North-Eastern states: Limited access to digital payment infrastructure and awareness about UPI transactions.
- Rural hinterland: Poor internet connectivity, limited smartphone access, and low digital literacy hinder UPI adoption.
Specific challenges: - Poor Internet Connectivity: Erratic electricity and limited internet access make it difficult for people to use digital payment platforms.
- Digital Literacy: Many individuals, especially in rural areas, lack the skills to use smartphones and digital payment apps.
- Smartphone Penetration: Limited access to smartphones, especially in rural areas, restricts UPI adoption.
To bridge this gap, the government and private sector are working to improve digital infrastructure, promote digital financial literacy to increase access to digital payment systems.
Cross border UPI
Cross border UPI is a milestone development. The Payments Vision Document of RBI has outlined expanding the global outreach of UPI and RuPay cards as one of the key objectives for internationalisation.
To take it forward, in July 2023, the RBI and the Central Bank of the UAE (CBUAE) signed a memorandum of understanding (MoU) for interlinking their payments infrastructure. Under this MoU, the two central banks agreed, inter alia, to cooperate on linking their Fast Payment Systems [UPI of India with Instant Payment Platform (IPP) of UAE.
Further, in February 2024, UPI connectivity between India and Mauritius; and India and Sri Lanka were launched. This connectivity has enabled Indian travellers to make QR code-based payments at merchant locations in Mauritius and Sri Lanka using UPI Apps.
Additionally, there are positive developments in India-Singapore UPI linkage. Account-holders of the participating banks and financial institutions in India and Singapore can do the cross-border remittance transactions through the UPI-PayNow linkage. Currently, participating banks in India for receiving remittances through the UPI-PayNow linkage are: Axis Bank, DBS Bank India, ICICI Bank, Indian Bank, Indian Overseas Bank and State Bank of India. Similarly, banks in India presently enabled for sending remittances through the UPI-PayNow linkage are: ICICI Bank, Indian Bank, Indian Overseas Bank and State Bank of India.
There is a daily transaction limit of Rs 60,000 (equivalent to around SGD 1,000) for undertaking cross-border remittance transactions through the UPI-PayNow linkage. Presently, only Person to Person (P2P) remittances for the purposes of “Maintenance of Relatives Abroad” & “Gift” are allowed.
According to RBI’s Annual Report (2024-25), efforts towards accelerating global outreach of India’s domestic payment systems, particularly Unified Payments Interface (UPI) and RuPay cards, were sustained, in view of goals for Viksit Bharat 2047. RBI, along with NPCI International Payments Ltd. (NIPL) are taking UPI to 20 countries with initiation timeline of 2024-25 and completion timeline of 2028-29. All these developments show that India has emerged as leader in UPI space.
According to an article:India’s Frictionless Paymentspublished in Finance & Development, IMF (September 2025) “UPI’s is a story of digital acceleration unlocked by interoperability.Interoperability was a key driver of India’s success in expanding digital payments.”Thus, interoperability—is the foundation of a broader digital transformation.
Dispute redressal is of paramount importance. NPCI has a UPI Dispute Redressal System.An aggrieved customer can raise a complaint with respect to a UPI transaction, on the Payment Service Provider (PSP)/ ThirdParty Application Provider (TPAP) app. The complaints can be uploaded by the customer on NPCI site giving details of the transaction, bank name, amount involved and nature of complaint on NPCI web-site.
Looking Ahead
Sanjaya Malhotra, Governor, Reserve Bank of India in his address at Global Fintech Fest 2025 held at Mumbai on 8 Octoberhas emphasized that the next phase of India’s digital journey mustprioritise responsible use of data. Key initiative such as Account Aggregator framework, Digital Rupee (e-₹), Responsible Lending Interface (RLI), are expected to drive the digital revolution forward. In this new terrain, UPI would play a distinct role.
(The author is a former Chief General Manager of the RBI and presently Chairman of Abhyutthana Foundation which is active in promoting digital financial education and awareness. Views expressed are personal.)