India’s Unified Payments Interface (UPI) has evolved from a policy experiment into the primary payments rail for a vast, fast‑growing economy, reshaping how people and businesses transact every day. In less than a decade, it has moved from a niche instant transfer system to critical national infrastructure, placing India at the centre of the global real‑time payments and creating deep strategic implications for banks, fintechs and policymakers.
From its launch in 2016, UPI was built as a mobile‑first, interoperable, account‑to‑account system designed to collapse fragmented payment mechanisms into a single open protocol. This design, combined with cheap data and rapid smartphone penetration, created powerful network effects. UPI has become synonymous with routine commerce in India, enabling everything from peer‑to‑peer transfers to payments at small shops and service providers, and quietly changing how money is perceived and used.
The scale now achieved is extraordinary. In 2025, UPI handled roughly 220 billion transactions, with a total value of about 3.6 trillion dollars at prevailing exchange rates. Towards the end of that year, it processed around 22 billion transactions a month, translating into close to 700 million payments a day and monthly values in the region of 330 billion dollars.
Behind this, however, lies a strikingly concentrated market structure. A couple of large technology‑driven applications dominate usage, together handling most UPI transactions, with a third player some distance behind and a long tail of smaller apps. Newer entrants have begun to grow their shares in both volume and value but remain relatively modest in the overall mix. This concentration creates strategic dependence on a tiny set of private intermediaries which effectively control user access to a public rail.
UPI is also steadily extending its reach beyond India’s borders. Indian travellers can now pay using familiar UPI interfaces in a growing set of destinations, particularly in parts of the Middle East and South Asia. In parallel, the international arm of the ecosystem has entered partnerships with foreign central banks, payment networks and banks to either replicate UPI‑like real‑time payment infrastructure or enable UPI‑based payments in markets ranging from Southeast Asia to Latin America and Africa. For the Indian diaspora and non‑resident account holders, major Indian players have opened UPI access in multiple advanced economies, while collaborations with global digital platforms seek to make domestic real‑time rails the backbone for cross‑border flows.
The innovation pipeline atop UPI is equally ambitious. AI‑enabled conversational payments are being piloted, allowing users to transact through natural language and voice with intelligent digital agents capable of discovering, deciding and executing payments within user‑defined limits. Credit on UPI and instalment facilities on UPI now let consumers convert larger purchases into structured credit directly within the same interface, aligning with broader goals of widening access to formal credit.
Lightweight modes and offline capabilities aim to serve low‑connectivity regions and basic devices, while early work on an internet‑of‑things version of UPI envisions payments triggered by smart appliances, wearables and connected vehicles.
Yet several pain points and structural tensions require a candid assessment. The most fundamental is monetisation and economic sustainability. UPI’s near‑zero‑cost proposition has been central to its adoption, but it means many ecosystem players struggle to cover infrastructure, security and support costs.
Repeated calls from industry to permit merchant fees on certain transaction categories, particularly larger payments, have met firm political resistance. This raises serious questions about long‑term investment incentives and the ability to maintain and upgrade infrastructure at the pace required.
Concentration risk is another major concern. With most transactions flowing through a couple of large apps, any operational, regulatory or business‑model shock affecting them could ripple across the entire ecosystem. Proposals to limit any single player’s share have been announced but repeatedly delayed, reflecting the difficulty of rebalancing without hurting user experience.
Meanwhile, the system remains vulnerable to the strategic choices and resilience of a small cluster of firms whose priorities may not always align perfectly with systemic stability.
Operational resilience has also been tested by sharp volume growth. Short‑lived outages, whether originating in banks, payment service providers or network elements, have already occurred and attracted public scrutiny. As daily volumes climb, the margin for failure narrows. A prolonged disruption during peak periods could quickly shift from being an IT event to a crisis of confidence with social and political consequences.
Overlaying this is cyber‑risk. While the core design with strong authentication and direct settlement is sound, the real vulnerabilities lie at the edge, in users’ devices, in fraudulent apps, in phishing and social‑engineering tactics.
Despite these challenges, UPI’s advantages remain fundamental. Its simplicity and interoperability allow any participating bank account to interact with any UPI‑enabled app, greatly reducing friction and making digital payments intuitive even for first‑time users. Near‑zero marginal cost and QR‑based acceptance have enabled micro‑entrepreneurs and informal workers to go digital with almost no capital expenditure, unlocking payment data that can support credit assessment and formalisation of economic activity.
For the public sector, UPI now sits within a larger digital public infrastructure that supports better targeting of transfers, improved tax compliance and granular visibility into economic flows, reinforcing its role as a strategic asset.
From a board‑governance and stewardship standpoint, involvement in the UPI ecosystem is no longer merely a technology or product decision. It is central to institutional strategy, resilience and reputation. Boards need to understand how dependent their organisations are on UPI volumes and on specific partner apps, how UPI economics actually work within their business models, and what contingencies exist if policy or market structures shift. They must treat UPI‑linked operational and cyber risks as board‑level issues. Good stewardship demands balancing growth and innovation with prudence, transparency and long‑term resilience.
UPI thus enters its next decade at a pivotal moment. Volumes and values continue to grow, international reach is widening, and AI‑enabled experiences promise to make payments nearly invisible, woven into daily life. At the same time, unresolved questions about sustainable economics, market concentration, cross‑border regulation and cyber‑security will require deliberate, coordinated responses if UPI is to remain both inclusive and robust.
“Infrastructure becomes destiny when it shapes how a society earns, spends and saves. The true test of leadership is to build such infrastructure not just to scale, but to last.”
