The Unified Payments Interface (UPI) platform, developed by the National Payments Corporation of India, is transforming how Indians move funds online and via mobile devices. With the ability to power inter-bank peer-to-peer and consumer-to-merchant payments, UPI has the potential to be a game-changer for the Indian economy.
As an open-source API, the UPI platform is compatible with all the leading e-wallets and conventional bank accounts, making instant real-time payments – both domestic and cross-border – a reality for Indians across the country.
It’s now fully regulated by the Reserve Bank of India (RBI) and as of September 2022, it was already partnered with 358 banks. This credible payment gateway has also become a recommended payment method in India’s digital economy. It’s now accepted by the leading operators that allow people to play India lottery games online, with the ability to make mobile payments through e-wallets like Google Pay, PhonePe, and Paytm. Its deposits and withdrawals are free and just as fast as using conventional methods like debit or credit cards.
UPI is powering India’s GDP
At a recent Google for India summit, Ashwini Vaishnaw, Union Minister of Electronics and IT, confirmed that transactions processed using the UPI platform are now “worth 55% of India’s GDP”. Interestingly, UPI had a seismic impact in rural and semi-urban areas of India, where UPI transactions are up 650% year-on-year, based on a report from PayNearby, a leading branchless and digital banking platform.
The same report indicated a 25% rise in the value of UPI transactions in rural and semi-urban areas, as well as a 14% rise in the total volume of UPI transactions. This report also analysed the behavioural shift in consumers across rural and semi-urban India. A growing number of citizens were utilising digital services for banking, e-commerce and entertainment.
Google is one of the key players in the UPI space in India. Google Pay is said to be the second most prominent payment provider through the UPI platform, with more than a third (34.3%) of payments coming through the tech giant’s flagship digital payment portal.
Will UPI remain a free service for Indian consumers?
Even Vijay Shekhar Sharma, chief executive of Paytm, has spoken out in glowing terms at the power and value of UPI. Sharma spoke recently at the Business Standard BFSI Insight Summit 2022 in Mumbai and said that UPI payments should remain fee-free for all Indian consumers, at least until digital transactions have proliferated into the mainstream.
Sharma believes the UPI service should be free until “more than a majority of shopkeepers and customers” are utilising the digital mobile payments interface. Sharma predicts that the percentage share of digital mobile payments in India’s retail sector is expected to grow from 30% to 75% in the next five years.
The UPI application has already successfully partnered with overseas payment landscapes. Nepal was the first to authorise the deployment of UPI for P2P, P2M and cross-border transactions. Major economies like France and the UK have also entered agreements with UPI through Lyra Network and PayXpert respectively. The RBI has also recently sealed an arrangement with the Monetary Authority of Singapore (MAS), confirming ongoing interoperability between the UPI application and the PayNow service.
UPI looks set to continue its rapid growth over the next decade and businesses and customers are set to see all the benefits of this digitalisation.
