How India turned payments into participation

A vegetable seller in a small town in Rajasthan scans a QR code taped to her cart, and the money reaches her account before the customer has even walked away. Hours later, a few thousand kilometres west, an Indian tourist in a Dubai mall uses the same app to pay for a handbag, and the transaction clears just as quickly.

Neither person thinks about what is happening underneath, and that is the point.

The system connecting both moments is India’s Unified Payments Interface, or UPI, a real-time payments network launched by the National Payments Corporation of India (NPCI) in 2016 that has become the world’s busiest by transaction volume.

What began as a way to transfer money between bank accounts has become part of everyday economic life, connecting consumers, merchants, banks and fintech companies through a common, interoperable system.

As India marks 80 years of independence, UPI is also marking ten years. Its journey offers a wider lesson in how digital public infrastructure can expand access to financial services, encourage private sector innovation and change the way an economy operates. The story is no longer simply about replacing cash; it is about what becomes possible when millions of people can move money instantly, cheaply and securely.

UPI simplified bank-to-bank transfers by allowing users to send and receive money instantly through a virtual payment address rather than sharing bank account details. Its ease of use and interoperability across banks and payment apps removed much of the friction that had limited digital payments.

A customer did not need to know the recipient’s account number. A small merchant did not need an expensive card terminal. Users were not tied to a single bank or payment provider.

But UPI did not emerge in isolation. It was built on the foundations of the JAM Trinity – Jan Dhan bank accounts, Aadhaar and mobile connectivity – and the broader India Stack, which brought together digital identity, payments, consent-based data sharing and other digital services. Together, these initiatives helped create the conditions for digital financial services to reach a much larger population.

“The JAM Trinity helped the government identify beneficiaries more reliably, reduce leakage and deliver welfare payments directly into verified bank accounts. For citizens, this meant faster and more transparent access to public benefits; and for government, it created a more efficient and accountable delivery mechanism,” says Ranadurjay Talukdar, Partner and Payments Sector Leader, EY India.

These foundations also meant UPI could connect with bank accounts and mobile phones that were already becoming widespread.

“UPI has evolved beyond a payments platform into a foundational layer of India’s digital public infrastructure, supporting financial inclusion, enabling innovation and fostering a vibrant ecosystem where banks, fintechs and merchants continue to build new digital financial experiences,” says Ritesh Shukla, MD and CEO of NPCI International Payments Limited (NIPL).

“Its journey demonstrates how trusted, interoperable public infrastructure can transform payments into an engine of broader economic participation,” he adds.

Once digital payments became widely used, they opened the door to new financial services. Fintech companies are using digital transaction data, with customer consent, to develop services spanning credit, insurance, wealth management and business finance. Small merchants that once operated largely in cash can build digital transaction histories that may strengthen their ability to access working capital. Consumers are increasingly using digital platforms to manage subscriptions, investments and insurance alongside payments.

Artificial intelligence could accelerate this shift by helping financial institutions and fintech companies assess transaction patterns and develop more personalised services.

Talukdar believes the next phase of fintech will move beyond digitising transactions towards building intelligence-led financial services.

“Payments have created the digital footprint; the next wave will use consented data, AI-enabled analytics and interoperable infrastructure to improve access to credit, insurance, savings, working capital and financial planning,” he says.

India’s digital payments model is also gaining an international footprint. Indian travellers can make UPI payments at enabled merchant locations in countries including the UAE, Singapore, France, Bhutan, Nepal, Mauritius, Sri Lanka, Qatar and Cambodia, using the same apps they use at home.

“NPCI International is supporting the development of sovereign real-time, UPI-like payment infrastructure in countries such as Namibia, Peru, and Trinidad and Tobago,” says Shukla.

The goal is not necessarily to replicate UPI in every market. India’s experience shows how a common payment infrastructure can connect different players while allowing banks and private companies to compete and innovate.

For Shukla, the broader ambition goes well beyond international acceptance.

“The future lies in interoperable payment networks that make cross-border transactions faster, cheaper, transparent and more convenient, while allowing each country to retain ownership and governance of its domestic payment system,” he says.

UPI’s first decade was defined by rapid adoption, rising merchant acceptance and an extraordinary increase in transaction volumes. The next decade will test the resilience of that growth.

India’s digital public infrastructure is increasingly being studied by governments seeking to modernise public services and financial systems. Yet experts caution that the next phase will require as much attention to trust as innovation.

“RBI’s Payments Vision 2028 signals this shift clearly. The next phase is not only about scale, but about trust, resilience, accountability and future-ready growth. Customer protection, cybersecurity and responsible data use need to be designed into payment, credit and financial data services from the outset, rather than added later as compliance overlays,” says Talukdar.

As payments become increasingly connected to credit, insurance, savings and other financial services, speed alone will not be enough. Users will expect systems that are reliable, secure and fair.

“Digital payments scale sustainably only when users believe the system is safe, predictable and fair,” says Talukdar. ■