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Unified Payments Interface (UPI)
Unified Payments Interface (UPI) is an Indian instant payment system developed by the National Payments Corporation of India (NPCI) in 20161. It facilitates inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions. Here’s how it works:
Mobile Application: UPI operates through a smartphone application that allows users to transfer money between bank accounts. It is a single-window mobile payment system.
Registration: To use UPI, your mobile number must be registered with your bank. You’ll also need a UPI ID (unique identifier) associated with your bank account.
Instant Transfers: With UPI, you can instantly transfer funds between two bank accounts. You can send or receive money using the recipient’s UPI ID or by scanning a Quick Response (QR) code. This makes it convenient for person-to-person transactions, bill payments, and shopping.
Security and Regulation: UPI 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).
Widespread Usage: UPI is one of the most widely used payment systems globally, both in terms of the number of users and transactions. As of November 2022, it had over 300 million monthly active users in India1. The proportion of UPI transactions in the total volume of digital transactions grew significantly, reaching 55% in 2020–21 with an average transaction value of ₹1,8491. In 2022, UPI enabled over 2,348 transactions every second1.
Recent Milestones: In August 2023, UPI recorded 10.5 billion transactions, crossing the 10 billion mark. The total value of annual transactions reached $1.7 trillion, with $380 billion in merchant payments1.
UPI has revolutionized digital payments in India, making it easier for individuals and businesses to transfer money seamlessly across banks. It’s a significant step toward a cashless economy!
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