What Is the Unified Payments Interface (UPI)?
The Unified Payments Interface (UPI) is a real-time payment system developed by the National Payments Corporation of India (NPCI) that enables instant bank-to-bank transfers via mobile devices. Launched in April 2016 and regulated by the Reserve Bank of India (RBI), UPI allows users to link multiple bank accounts to a single app and send or receive money using a Virtual Payment Address (VPA), phone number, or QR code, without sharing sensitive bank details.
UPI runs on top of the Immediate Payment Service (IMPS) infrastructure and operates 24/7/365. As of September 2025, UPI processes close to 20 billion transactions per month with a total monthly value exceeding $280 billion (USD). In 2025, UPI surpassed Visa in global digital payment volume, according to the International Monetary Fund, and accounts for roughly 83% of all digital payments in India.
More than 550 Indian banks participate in the UPI network, and the system supports payments through third-party apps like PhonePe, Google Pay, Paytm, and Amazon Pay.
How does UPI work?
UPI operates on a four-party model: the payer's app (front-end payment service provider), the payer's bank, the payee's app, and the payee's bank. NPCI sits at the center as the switch that routes and settles transactions between these parties.
The system supports two core transaction types. A "pay" request is a push payment where the sender initiates a transfer to a recipient. A "collect" request is a pull payment where the recipient requests funds from the payer, who then approves or declines.
To use UPI, a person downloads a UPI-enabled app, links their bank account, and creates a VPA (for example, name@bankname). Every transaction requires two-factor authentication: device binding (the app is tied to the user's registered mobile number and device) plus a UPI PIN set by the user. No bank account numbers, IFSC codes, or card details need to be shared between parties.
Settlement between banks happens in near real-time through NPCI's clearing infrastructure. For the end user, funds typically appear in the recipient's account within seconds. There is no transaction fee for person-to-person (P2P) payments, which has been a major driver of adoption. Person-to-merchant (P2M) transactions may carry a small interchange fee, though the Indian government has kept UPI's merchant discount rate at zero for small merchants to encourage digital payment adoption.
Why did UPI scale so quickly?
UPI went from 93,000 transactions in its first month (August 2016) to over 16 billion monthly transactions by early 2025. Several design decisions drove this growth.
First, UPI is interoperable by design. Any user on any UPI app can pay any other user or merchant on any other UPI app, regardless of which bank either party uses. This eliminated the closed-loop fragmentation that limits many payment systems.
Second, NPCI built UPI as an open API layer, allowing third-party developers to build payment apps on top of the infrastructure after obtaining NPCI authorization. This opened the market to non-bank players like PhonePe and Google Pay, which now process the majority of UPI volume. To manage concentration risk, NPCI caps any single third-party app at 30% of total UPI transaction volume.
Third, zero cost for end users removed the friction that slows adoption in most payment systems. The Indian government subsidizes UPI's operating costs, treating it as digital public infrastructure rather than a for-profit service.
Fourth, India's broader digital infrastructure played a supporting role. Aadhaar (biometric identity), Jan Dhan (financial inclusion bank accounts), and affordable smartphones created the base layer of bank-account-holding, digitally connected users that UPI needed to scale.
As of 2025, UPI has over 500 million active users. Around 70% of UPI users are outside India's largest metro areas, reflecting the system's penetration into smaller cities and rural markets.
Where is UPI accepted internationally?
UPI has expanded beyond India through NPCI International Payments Limited (NIPL), a subsidiary focused on deploying UPI and India's RuPay card scheme globally. As of late 2025, UPI is accepted for merchant payments in Bhutan, Nepal, Singapore, Sri Lanka, Mauritius, UAE, France, Cyprus, and Qatar. NIPL plans to expand to four to six additional countries in 2025 and 2026, targeting Japan, Thailand, and broader Southeast Asia.
International UPI works primarily through two models. In the merchant acceptance model, Indian travelers use their existing UPI apps to pay at overseas merchants via QR code. In the bilateral linkage model, two countries' real-time payment systems are connected for cross-border transfers. The UPI-PayNow link between India and Singapore, launched in 2023, is the most prominent example, enabling real-time P2P remittances between the two countries.
Cross-border UPI transaction volumes are growing rapidly from a small base. Volumes jumped from roughly 37,000 transactions in FY2024 to over 755,000 in FY2025, a 20x increase. NIPL is also working with countries like Peru, Namibia, and Trinidad and Tobago to help them build domestic real-time payment systems modeled on UPI's architecture.
India is also participating in Project Nexus, a Bank for International Settlements (BIS) initiative to connect instant payment systems across India, Malaysia, the Philippines, Singapore, and Thailand into a multilateral network. If successful, Project Nexus would create a framework for real-time cross-border payments across participating countries without requiring individual bilateral agreements.
How does UPI compare to other real-time payment systems?
UPI is part of a global wave of national instant payment systems, but it stands out in both scale and design. Here is how it compares to the systems most relevant for cross-border payments:
Brazil's Pix, launched in 2020, follows a similar model: instant settlement, QR code payments, zero cost for individuals, and a central bank as operator. Pix processed 63 billion transactions in 2024, making it the closest comparator to UPI in scale and philosophy.
The UK's Faster Payments system supports real-time GBP transfers and has been operational since 2008, but it processes significantly lower volumes (around 4.3 billion transactions in 2022) and does not have the same app-layer interoperability that UPI provides.
The US has two newer real-time systems: FedNow (launched 2023) and RTP (launched 2017). Neither has achieved the ubiquitous adoption seen with UPI or Pix, partly because the US payment market is more fragmented across cards, ACH, and wire transfers.
Mexico's SPEI offers near-instant interbank transfers and is widely used for domestic payments, though it lacks UPI's app-layer ecosystem and QR code infrastructure.
Singapore's PayNow is notable for its direct bilateral link with UPI, enabling cross-border real-time transfers between the two countries.
What does UPI mean for fintech companies building cross-border payments?
For fintechs serving Indian markets or corridors involving India, UPI is the dominant payment rail. Any platform sending payouts to India, whether for payroll, remittances, or marketplace disbursements, needs to connect to UPI or IMPS to deliver the instant settlement experience that Indian recipients expect.
India was the top recipient of remittances among low- and middle-income countries in 2024, receiving $129 billion (USD) according to World Bank estimates. As UPI's international linkages expand, it is increasingly relevant for fintechs building remittance or payout products for Indian diaspora communities.
Due supports INR payouts to India via UPI and IMPS with instant settlement, accessible through a single API alongside payment rails in 80+ other countries. For fintech companies that need to reach Indian bank accounts without building direct NPCI integrations, this provides compliant access to India's real-time payment infrastructure as part of a broader global payout network.
