UPI set for IoT leap: Smart devices to make autonomous payments

UPI

The Unified Payments Interface (UPI) is in for a smart update as the National Payments Corporation of India (NPC) is looking to build a new system which will have the ability to carry out transactions across gadgets. Currently, all UPI transactions are only executed through a mobile phone.

However, the NPC is developing an Internet of Things (IoT)-ready version of UPI that will allow automated payments through smart appliances, wearables, connected vehicles, and more, reported Business Standard.

With this upgrade, devices like refrigerators, washing machines, connected cars, and even smartwatches, could initiate UPI payments on their own. For example, parking fees can be paid directly from your car, subscriptions renewed automatically through your smart TV, all of this without opening a third-party UPI app.

The report further said that the upcoming features will allow devices to process payments using a separate virtual payment address tied to the user’s primary UPI ID. This opens the door for embedded transactions on smart devices, powered by delegated payments via UPI Circle.

“Giving a transaction mandate to a person and to a device is operationally different but fundamentally similar. There’s some nuance involved in this feature compared to others since devices will have separate IDs,” the report said, quoting people familiar with the matter.

NPCI’s annual innovation pipeline includes a new feature allowing devices to autonomously execute UPI transactions when a user-issued mandate is active.

Onboarding may require one-time password authentication. A source noted that leveraging previous delegated payments ensures safe testing. UPI Circle will enable users to authorise payments to secondary users with set limits, while the device will receive an additional UPI ID.

This feature supports delegated payments and AutoPay for recurring transactions, eliminating the need for fresh commands each time, thereby processing payments securely.

NPCI plans to introduce this IoT-ready UPI at the 2025 Global Fintech Fest, pending regulatory approvals. In 2023, NPCI introduced several features, including credit lines on UPI and UPI Lite X for offline payments.

With UPI recording 18.4 billion transactions in June, NPCI aims to grow UPI tenfold from current levels.