India plans to bring hundreds of millions of new users onto Unified Payments Interface, its real-time payments system, while pitching the platform for wider adoption overseas.
National Payments Corporation of India aims to draw an additional 200 million to 300 million Indians to UPI to “break their cash memory” through initiatives including delegated accounts for children and household staff, who may lack access to traditional bank accounts, said Dilip Asbe, its managing director and chief executive.
The home-grown payments platform has in the past five years transformed how more than 450 million retail consumers pay for everything from holidays to a cup of tea using their smartphones. Users can scan merchant QR codes to make payments ranging from small amounts to up to 500,000 rupees ($5,817) from their bank accounts — thus far without paying transaction fees.
Such is the popularity of UPI that India today accounts for nearly 46% of the world’s digital transactions, after a 90-fold increase in retail digital payments in the past 12 years, according to a PwC report. Stakeholders including Prime Minister Narendra Modi’s government, NPCI and India’s central bank are now looking to capitalize on that success by touting the platform overseas.
“The idea is to make remittances very affordable and real-time to all the diaspora,” Asbe said.
Global Expansion
NPCI’s domestic focus, as well as the delegated accounts, is also on expanding UPI’s multilingual and conversational chat features to widen access, Asbe said. The outfit is piloting vision recognition technology to encourage higher UPI usage in parking payments, he added.
Furthermore, it’s also looking at ways to expand its credit offering for retail customers. UPI already offers small-ticket loans, but Asbe believes its architecture could help lenders to make credit approval decisions based on customer repayment behavior, while also improving collections.
“The credit-as-a-service model will also evolve and get some scale in the next three to five years,” Asbe said.
Abroad, the Indian government has roped in its embassies to help pitch UPI, according to Asbe, while RBI has reached out to several countries to push the platform.
The country’s diaspora transferred a record $129 billion back to India in 2024, the highest sum ever recorded by any country in a single year, according to a World Bank report.
Asbe said that besides remittances, UPI could also help with money flowing in the other direction, for example to help Indians pay for overseas education.
The Indian government has struck deals with some nations boasting a large Indian presence, such as Singapore and the United Arab Emirates, but is yet to make headway with western nations like the UK, US and Australia.
“It might take time because other countries are at a different stage of real-time payments system stabilization,” Asbe added.
Transaction Fees
Despite the rapid rise in UPI transactions, a potential challenge looms in the question of whether users should be charged a fee for digital payments. At the heart of the debate is the Merchant Discount Rate (MDR) — a fee collected by banks from merchants at the point of sale for processing transactions.
UPI payments earlier carried an MDR of 30 basis points, but the government waived the fee in 2020 to accelerate the platform’s adoption. To compensate merchants, incentives were rolled out to cover operational costs, but those plummeted from 36 billion rupees in 2024 to 15 billion rupees the following year. Industry bodies have pushed to reinstate the transaction fee.
Such a move could pump the brakes on UPI’s growth. A recent LocalCircles survey of 32,000 respondents revealed that 73% of UPI users would stop using the service if a transaction fee is imposed.
The UPI ecosystem is working with the government and RBI to make the platform viable “by creating a small fee for the large merchants,” Asbe said.
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