UPI positions India as global digital payments leader

India’s Unified Payments Interface (UPI) system now facilitates at least 18 billion digital payment transactions every month, making the country a global leader in instant payments.

The strides recorded by the UPI system both in numbers and impact, plus how it is revolutionizing the country’s digital economy, are outlined in a document published this month by the Indian government’s Press Information Bureau.

From money transfers for small transactions, to safe private payments, QR code-based merchant payments, direct donations and streamlined refunds, the UPI is said to be touching and facilitating every aspect of financial life in India.

Per the document, the UPI accounts for 85 percent of all digital payments in the country and makes for close to 50 percent of all global instant payments. It indicates that the UPI now processes over 640 million daily transactions, surpassing the 639 million processed by Visa.

In June, for instance, 18.39 billion transactions were processed via the system, representing a 32 percent rise from the 13.88 billion in June of the previous year. The increase, the document indicates, represents a transaction value of ₹24.03 lakh crore (about US$288 billion).

Apart from the growing number of users which is nearing 500 million individuals and 65 million merchants, it is also growing in scale as it now connects 675 banks with operations conducted using one interoperable platform.

The document highlights interoperability as a major driver of UPI’s growth as it not only enables users to conduct transactions from different banks and mobile applications, but also facilitates seamless merchant payments, bill settlements, peer transfers, and grievance redressal, among other things.

Aside its strides at home, the document underscores the UPI’s international attractiveness, and mentions that India has established partnerships for deployment of the system in some countries across Africa, Europe, Asia and the Middle East. These countries include Bhutan, France, Mauritius, Nepal, the United Arab Emirates (UAE), Singapore and Sri Lanka. There is also a push from Indian for the system to be adopted by member countries of the BRICS bloc. Japan has also been allured by the UPI.

Without strong investments in digital infrastructure, UPI would not have seen this level of success so far, the document suggests. It mentions the role of the Aadhaar biometric digital ID which ensures secure authentication, and the enhancement of connectivity infrastructure such as the rollout of 5G network as some of the reasons the UPI thrives.

The UPI’s successes have also attracted attention from bodies like the International Monetary Fund (IMF), making the system a global benchmark for digital payments.

The IMF, in a fintech publication in June, praised the UPI system for its interoperability, low-cost, high scalability, and its role in driving financial inclusion by facilitating retail payments among the unbanked.

Measures to counter UPI fraud

Given the growing adoption of the system, authorities are taking measures to strengthen its security. This step is in line with efforts to prevent users from suffering fraud attacks as has been the case since 2022, according to The Logical Indian.

The outlet mentions results of a recent survey which showed that about 20 percent of UPI users have been victim of fraud, prompting the National Payments Corporation of India (NPCI) – the developer of UPI – to introduce stronger fraud prevention measures.

The NCPI said last year that it was going to introduce biometric authentication for UPI payments.

UPI was developed in 2016 by the NPCI and built on the Immediate Payment Service (IMPS) infrastructure. It is part of the India Stack which the country believes will make it a trillion dollar digital economy in the next five years.

Article Topics

biometric authentication  |  biometrics  |  digital payments  |  digital public infrastructure  |  India  |  Unified Payments Interface - UPI