Overview

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.

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.

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 660,000, 204,000, and 186,000 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.

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.

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.

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.

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).

The feature enables users to initiate transactions using voice commands or by entering a UPI ID or mobile number. When a mobile number is provided, the system retrieves the associated UPI ID and generates a payment request through the user's default UPI application. The service is integrated with CoRover's BharatGPT and supports multiple Indian languages.

The feature has also been incorporated into AskDISHA, a virtual assistant used by Indian Railways and IRCTC, allowing users to book tickets and complete payments through voice interaction.