Unified Payments Interface
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.
Quick factsUnified Payments Interface
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. 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.
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.
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.
Transaction Fees
From 2019 onwards UPI Transactions were exempt from charges. However, the Lok Sabha passed a bill in August 2026 that amends the Payment and Settlements Systems Act, 2007 to authorise the government to permit the levy of charges on UPI. The charges may be levied by banks and service providers. The charge known as Merchant discount rate is expected to be in the range of 0.3%-0.5% of the transaction & is also expected to be levied on transactions above a threshold. It is also expected that the levy will only be on payments made to businesses
The levy of the fee is expected to help the banks and other institutions recover their costs in maintaining the infrastructure needed to enable the entire payment ecosystem.
On 14 September 2026, the Indian government notified provisions prohibiting banks and payment-system providers from imposing direct or indirect charges on UPI transactions of up to ₹2,000 and payments using RuPay debit cards. Whether charges would apply to higher-value UPI transactions, and how they would be levied, remained undecided. From 15 October 2026, a standard merchant discount rate (MDR) of 0.4% will apply to person-to-merchant UPI transactions above ₹2,000, capped at ₹300 per transaction. Railway, fuel, insurance, telecom and government utility payments above ₹2,000 will instead attract a flat ₹5 MDR. Capital-market payments will attract a separate rate of 0.02%, capped at ₹300.
Service
For real-time payments from one bank account to another, any UPI client app can be used and multiple bank accounts can be linked to a single app. Money can be sent or requested using a user-created Virtual Payment Address (VPA) or UPI ID for each bank account using the KYC-linked mobile number. UPI also generates a specific QR code for each user account for contactless payments. The RBI increased the UPI payment limit for payments in hospitals and educational institutions from ₹100,000 to ₹500,000 on 8 December 2023. Multi-factor authentication for UPI e-mandates will now be activated over ₹100,000, as opposed to ₹15,000, for credit card repayments, mutual fund subscriptions, and insurance p
Any UPI app can be used to transfer funds from and to UPI enabled banks. Apart from various third-party apps such as Google Pay (previously Tez), PhonePe, Paytm, Samsung wallet (Samsung pay), Amazon Pay, Airtel Payments Bank, MobiKwik, WhatsApp Pay, Hero Digital Lending & UPI App, NPCI manages its own app, BHIM.
The total number of banks linked to UPI platform grew from 21 in April 2016 to 304 in February 2022.
Market share
From 93,000 transactions in August 2016 valued at ₹ 3 crore (30 million), UPI generated 80 crore (800 million) transactions in March 2019 with a total value of ₹ 1.3 lakh crore (1330 billion). In June 2021, UPI recorded 9.4 crore (94 million) IPO mandates that increased to 76.6 lakhs (7.66 million) in July. This was the highest ever since UPI was made mandatory by Securities and Exchange Board of India for domestic retail investors for IPO process. By late August 2020, with 18 billion annual transactions, UPI surpassed American Express in India. NITI Aayog predicted that UPI will also surpass Visa and Mastercard by 2023.
As of July 2021, UPI registered 432.5 million transactions that accounted for ₹567,345 million with highest average daily transaction of approximately 100 million that is double the amount from July 2020. As of August 2021, UPI forms 10% of all retail payment in India. PhonePe and Google Pay both recorded 1 billion transactions in August with a market share of 45.94% and 34.45% respectively in the UPI payment ecosystem while Paytm took 11.94% share with ₹387.85 million transaction.
From the financial year 2015–21, the domestic retail payment by value on UPI grew at 18% at a compound annual growth rate (CAGR) while between 2017 and 2021, the collective payment on all forms of UPI grew at 400% CAGR. In the financial year 2021, ₹41 trillion (short scale) worth of money was exchanged on the UPI platform that is 2.8 times the value of debit and credit card payment at point of sale (POS) terminals and 20 times the value of digital wallet and prepaid instruments in India.
Internationalization
Around 777 million Indian consumers shopped across the border in 2021. To make ease of payment, NPCI International Payments Limited (NIPL) signed memorandum of understanding (MoU) with UK-based PPRO Financial on 17 November 2021 to expand the acceptance of UPI into foreign markets, especially those in China and the United States which account for half of all international transaction coming from India. On 26 January 2022, UK based fintech startup Transact365 enabled UPI for global merchants with real time currency conversion facility that will help them do business in India independent of local presence. As per NPCI and RBI mandate, banks, payment service providers (PSPs) and third-party app
With the release of the Payments Vision 2025 document on 17 June 2022, RBI will push for internationalization of UPI with nations using United States dollar, Pound sterling and Euro under bilateral treaties. Ministry of External Affairs (MEA) also actively pushing for internationalization of UPI due to geopolitical concerns. But several countries including Canada are reluctant to accept UPI due to pushback from American firms. MEA is looking for Central Bank to Central Bank transfer using UPI as the pipeline and a collaborative effort if the countries have a similar system like UPI. On 12 October 2022, India offered UPI and related technologies to Commonwealth of Nations.
On 7 February 2023, PhonePe announced extending support of UPI for international payments in UAE, Singapore, Mauritius, Nepal, and Bhutan. Users will be able to pay in international currency directly from Indian bank accounts. NIPL signed a definitive agreement with PPRO Financial on 27 April 2023 that will enable acceptance of UPI among international payment service providers (PSPs) and global merchant acquirers.