Search results for how does UPI payment work explained explained 2026 in India explained
- en.wikipedia.org › wiki › Unified_Payments_InterfaceEN
Unified Payments Interface - Wikipedia
[Jump to content](https://en.wikipedia.org/wiki/Unified_Payments_Interface#bodyContent) From Wikipedia, the free encyclopedia Indian instant payment system | Product type | [instant](https://en.wikipedia.org/wiki/Instant_payment) [payment system](https://en.wikipedia.org/wiki/Payment_system) | | Owner | [National Payments Corporation of India](https://en.wikipedia.org/wiki/National_Payments_Corporation_of_India) | | Country | [India](https://en.wikipedia.org/wiki/India) | | Introduced | 11April 2016;10 years ago(2016-04-11) | | Markets | See [_Acceptance_](https://en.wikipedia.org/wiki/Unified_Payments_Interface#Acceptance) | | Website | [upichalega.com](https://upichalega.com/) | Unified Payments Interface **Unified Payments Interface** ( **UPI**) is an Indian [instant payment](https://en.wikipedia.org/wiki/Instant_payment) system and [protocol](https://en.wikipedia.org/wiki/Communication_protocol) developed by the [National Payments Corporation of India](https://en.wikipedia.org/wiki/National_Payments_Corporation_of_India) (NPCI) in April 11th 2016. [[1]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-:5-1)[[2]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-:9-2) It is used on mobile devices to instantly transfer funds between two bank accounts using only a unique UPI ID. It runs as an [open source](https://en.wikipedia.org/wiki/Open_source) application programming interface (API) on top of the [Immediate Payment Service](https://en.wikipedia.org/wiki/Immediate_Payment_Service) (IMPS),[[3]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-3)[[4]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-4)[[5]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-5)[[6]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-6) and is regulated by the [Reserve Bank of India](https://en.wikipedia.org/wiki/Reserve_Bank_of_India) (RBI). Major Indian banks started making their UPI-enabled apps available to customers in August 2016, [[7]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-7) and the system is today supported by almost all Indian banks. [[8]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-lat1-8)[[9]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-9) In 2021, UPI in India had over 500 million active users. [[10]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-10)[[11]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-11) In the month of August 2025, 20 billion UPI transactions worth ₹ 25 trillion (about US$293 billion) were processed by the UPI system, processing an average of nearly 7,500 transactions every second. UPI is the largest [real-time payment](https://en.wikipedia.org/wiki/Real-time_payment) system in the world. it handles more than 640 million transactions every day, compared to [Visa's](https://en.wikipedia.org/wiki/Visa_Inc.) 639 million. [[14]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-:1-14)[[15]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-:2-15) As of 2025, UPI accounts for 84% of digital payments in India. [[16]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-16) On 25th August 2026, UPI completed 10 years of functioning and was responsible for transactions worth ₹ 314 Trillion in FY 2025-26 representing an increase of more than 4000-fold since the year of its inception. In terms of number of transactions, there has been almost a 13000 fold increase in transactions with 241.62 billion transactions concluded in FY 2025–26. [[17]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-17)[[18]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-18) ## History UPI works on a four-pillar push-pull interoperable model where there will be a remitter/beneficiary front-end PSP ( [payment service provider](https://en.wikipedia.org/wiki/Payment_service_provider)) and a remitter/beneficiary back-end bank that settles the monetary transaction for the users. [[23]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-23) [[24]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-24) From 1 January 2019, UPI became a popular payment option for [initial public offerings](https://en.wikipedia.org/wiki/Initial_public_offering) (IPOs). [[29]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-:7-29) To make UPI economically feasible for payment companies, RBI is considering a [merchant discount rate](https://en.wikipedia.org/wiki/Merchant_discount_rate) (MDR) on future UPI transactions. [[30]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-30) In its first monetary policy for the 2022–23 financial year, RBI proposed a cardless cash withdrawal facility from ATMs using UPI-based QR codes. [[32]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-32) [[34]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-34) Over 640 million transactions are handled via UPI per day, compared to 639 million by Visa. [[37]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-37) ## Market share | Year | No. of Payment Partners on UPI | Transaction volume (in mn) | INR value (in mn) | USD value (in bn) | |-|-|-|-|-| | **2026** | 684 | | | | | 2017 | 67 | 418.8 | 570,208.7 | 7.7 | | 2016 | 35 | 2.65 | 8,930.7 | 0.12 | ## Internationalization Users will be able to pay in international currency directly from Indian bank accounts. ## Acceptance ### India (Domestic) [[170]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-170) NPCI is planning to link UPI with standalone mobile wallets so that users can transfer money from one provider to another one which until now is restricted due to use of closed source technology. There is also provision for off-line UPI payment through the use of [near field communication](https://en.wikipedia.org/wiki/Near-field_communication) (NFC). [[172]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-172) On 20 April 2020, Google added support for UPI payment in India to buy membership of [YouTube Premium](https://en.wikipedia.org/wiki/YouTube_Premium) and [YouTube Music](https://en.wikipedia.org/wiki/YouTube_Music) either directly through a website or on the mobile application. UPI is also enabled for the YouTube SuperChat feature. [[179]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-179) As per April 2021 RBI Monetary Policy Committee directive, after 31 March 2022, all the " [know your customer](https://en.wikipedia.org/wiki/Know_your_customer)" (KYC)-compliant [digital wallets](https://en.wikipedia.org/wiki/Digital_wallet) will become interoperable by using UPI system. Due to high usage, [Samsung Electronics](https://en.wikipedia.org/wiki/Samsung_Electronics) integrated UPI [barcode scanner](https://en.wikipedia.org/wiki/Barcode_reader) directly into mobile camera application for faster payment. [[187]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-187) [Lucknow Municipal Corporation](https://en.wikipedia.org/wiki/Lucknow_Municipal_Corporation) (LMC) in collaboration with [Paytm](https://en.wikipedia.org/wiki/Paytm) setting up QR code for housing tax. [Kotak Mahindra Bank](https://en.wikipedia.org/wiki/Kotak_Mahindra_Bank) has rolled out the UPI payment facility for the [Goods and Services Tax](https://en.wikipedia.org/wiki/Goods_and_Services_Tax_(India)) Network (GSTN) in the following states: Assam, Delhi, Goa, Gujarat, Haryana, Himachal Pradesh, Kerala, Madhya Pradesh, Maharashtra, and Odisha. [[191]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-191) NPCI has integrated [Kendriya Vidyalaya Sangathan](https://en.wikipedia.org/wiki/Kendriya_Vidyalaya_Sangathan) with the [Bharat Bill Payment System](https://en.wikipedia.org/wiki/Bharat_Bill_Payment_System), allowing pupils to pay their school fees with UPI. Additionally, [Kolkata Metro Green Line](https://en.wikipedia.org/wiki/Kolkata_Metro_Green_Line) stations also have UPI facility.[[193]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-193) [Kolkata Metro Orange Line](https://en.wikipedia.org/wiki/Kolkata_Metro_Orange_Line) were made UPI enabled from July 2024. Zomato partnered with ICICI Bank, whereas Swiggy is utilizing the UPI Plugin to enable payment, doing away with the need for a TPAP license. UPI payment methods for temple offerings have also been implemented by the [Travancore Devaswom Board](https://en.wikipedia.org/wiki/Travancore_Devaswom_Board). Under schemes like Rebate of State and Central Taxes and Levies (RoSCTL) and Remission of Duties and Taxes on Exported Products (RoDTEP), Indian government will permit the payment of customs duties via UPI and expand its use beyond duty payments to include expedited processing of refunds and incentives.
- redcompasslabs.com › insights › what-is-upi-indias-instant-payment-scheme-explainedEN
What is UPI? India's instant payment scheme explained
UPI is a QR code-based payment. It doesn't matter who provides the QR code or UPI service, users can send and receive money using any UPI app.
- investopedia.com › terms › u › unified-payment-interface-upi.aspEN
Unified Payments Interface (UPI): How It Works and Its Benefits
:max_bytes(150000):strip_icc():format(webp)/Unified-payment-interface-upi_final-76629e7fb7bb4bbca0068eabf39a78ea.png) UPI is used on mobile devices in India to facilitate instant peer-to-peer (P2P) and person-to-merchant (P2M) transactions. Close ### Key Takeaways - The Unified Payments Interface (UPI) is a real-time payment system by the National Payments Corporation of India, facilitating bank transfers via smartphones. - UPI uses Immediate Payment Service (IMPS) and Aadhaar Enabled Payment System (AEPS) for seamless transactions, regulated by the Reserve Bank of India. - It allows mobile payments without the need for cash, credit, or debit cards, ensuring safety and financial convenience for users. - UPI supports both local and international transactions to India via various banking apps. - UPI contributes to increasing digital transactions in India's economy by reducing the reliance on cash. ## What Is a Unified Payments Interface (UPI)? The Unified Payments Interface (UPI) is a transformative mobile payment system developed by the National Payments Corporation of India (NPCI). It allows users to securely transfer money between bank accounts using just a smartphone app, bypassing the need to enter sensitive bank details each time. This streamlined process is regulated by the Reserve Bank of India (RBI). It has contributed significantly to the growth of digital transactions in India. UPI has made peer-to-peer and inter-bank transfers easier, safer, and more accessible for millions of users since its pilot launch in April 2016. We'll explore how UPI operates, its benefits, and explain how users can perform transactions. ## How UPI Transactions Work The Unified Payments Interface is a real-time payment system. It is designed to enable peer-to-peer inter-bank transfers through a single two-click factor authentication process. The interface is regulated by the [Reserve Bank of India (RBI)](https://www.investopedia.com/terms/r/rbi.asp), India's central bank. It works by transferring money between two bank accounts along with a mobile platform. The pilot system launched in India on April 11, 2016, and banks began uploading their interfaces in August 2016.1 UPI uses systems like Immediate Payment Service (IMPS) and Aadhaar Enabled Payment System (AEPS) for smooth account settlements. It facilitates push (pay) and pull (receive) transactions and even works for [over-the-counter](https://www.investopedia.com/terms/o/otc.asp) or barcode payments, as well as for multiple recurring payments such as utility bills, school fees, and other subscriptions. Open a New Account Advertiser Disclosure × The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. ### Important In 2021, $940 billion was transacted over UPI, and by 2022, monthly transactions averaged over six billion.2 Once a single identifier is established, the system allows mobile payments to be delivered without the use of credit or debit cards, net banking, or any need to enter account details. This would not just ensure greater safety of sensitive information, but connect people who have bank accounts via [smartphones](https://www.investopedia.com/terms/s/smartphone.asp) to carry out hassle-free transactions. Overall, UPI leads to fewer cash transactions and may help reduce the [unbanked](https://www.investopedia.com/terms/u/unbanked.asp) population. ## Services Offered by Unified Payments Interface A number of key features are offered by UPI. Users can access balances and transaction histories, along with sending and receiving money. To send money, users need an account number, the Indian Financial System Code (or IFSC, which is an alphanumeric code that facilitates electronic transfers), the mobile number of the recipient, and a virtual ID or Aadhaar number (which is like a Social Security number). ## Is UPI Available in the U.S.? Yes, UPI is available in the U.S. You are able to send money to India from the U.S. using UPI. You need the UPI ID of the receiver and can use a variety of banking apps, such as Wise, World Remit, and Remitly. ## Which UPI Systems Can You Use in India? The UPI systems that you can use in India consist of many banking/payment apps that allow you to use UPI. These include PhonePe, Google Pay, Axis Pay, and BHIM. ## The Bottom Line The Unified Payments Interface (UPI) in India is a secure and efficient mobile payment system regulated by the Reserve Bank of India. It streamlines transactions by eliminating the need for cash or card details and supports both peer-to-peer and inter-bank transfers. Since its inception in 2016, UPI has transformed financial transactions in India by enabling hassle-free payments and reducing reliance on cash, thus fostering greater economic integration. By using existing systems like IMPS and Aadhaar Enabled Payment System, UPI ensures seamless and secure money transfers, making it a vital tool for the country's digital economy.
- youtube.com › watchEN
Will you soon have to pay to use UPI? Govt explains new MDR plan
Will you soon have to pay to use UPI? The government has clarified that UPI transactions for citizens will remain free, while the vast ...
- stripe.com › resources › more › unified-payments-interface-upiEN
What is Unified Payments Interface (UPI)? - Stripe
1. [Introduction](https://stripe.com/resources/more/unified-payments-interface-upi#introduction) 4. [How does UPI work?](https://stripe.com/resources/more/unified-payments-interface-upi#how-does-upi-work) 1. [How to send and receive payments](https://stripe.com/resources/more/unified-payments-interface-upi#how-to-send-and-receive-payments) 13. [How do businesses accept UPI payments?](https://stripe.com/resources/more/unified-payments-interface-upi#how-do-businesses-accept-upi-payments) 1. [QR code payments](https://stripe.com/resources/more/unified-payments-interface-upi#qr-code-payments) 14. [App-to-app payments](https://stripe.com/resources/more/unified-payments-interface-upi#app-to-app-payments) Unified Payments Interface (UPI) changed how money moves in India. Below, we’ll explain how UPI works, why it scaled so quickly, and what it can do for businesses. ## What is UPI? Unified Payments Interface is India’s [real-time](https://stripe.com/resources/more/real-time-payments-explained) payment system. UPI moves money instantly between bank accounts via a mobile device. UPI connects hundreds of Indian banks through one interface. With a [UPI app](https://www.npci.org.in/what-we-do/upi/3rd-party-apps) such as PhonePe, Google Pay, Paytm, or Amazon Pay, you can send money from your bank account to another account as long as the owner of the second account has a UPI ID (also called a virtual payment address or VPA). - **Instant transfers 24/7:** Funds move in real time from one bank account to another. - **No fees:** UPI payments are free for everyday users. Businesses don’t pay fees, either, because of a government-backed zero merchant discount rate (MDR) policy (though there have been [calls to begin charging large businesses](https://www.cnbctv18.com/business/payments-council-india-mdr-upi-rupay-transactions-19578510.htm)). - **PIN-based security:** Every transaction is authorized by a secure PIN set by the user. UPI uses two-factor authentication and doesn’t expose account details to the other party. ## How does UPI work? ### Interoperability UPI was designed as an open network. [More than 550 Indian banks](https://www.europeanpaymentscouncil.eu/news-insights/insight/upi-revolutionising-real-time-digital-payments-india) are integrated into one real-time switch operated by the National Payments Corporation of India (NPCI). That switch lets a user with an account at one bank send money to someone with an account at another bank without issue. Whether you use Google Pay, PhonePe, or a bank’s own app, all of them operate on the same UPI infrastructure. Any user can pay any other user, regardless of which app or bank either party uses, and businesses can accept UPI no matter which app the customer uses. ## Why has UPI adoption surged among businesses in India? ### New cost structure Unlike credit cards, UPI lets businesses keep 100% of the revenue.
- razorpay.com › blog › what-is-upi-and-how-it-worksEN
What is UPI?: Unified Payments Interface Features and How UPI ...
## How Unified Payments Interface (UPI) Payment Works in India? UPI operates on a simple yet effective framework that streamlines digital transactions. Here’s how it works: ### **Step 1. User Registration** To use UPI, users first download a UPI-enabled app, such as PhonePe, Google Pay, or Paytm. After installation, they register by linking their bank account and creating a unique virtual payment address (VPA), such as user@bankname, which serves as their [UPI ID](https://razorpay.com/learn/what-is-upi-id/). ### **Step 2. Initiating a Transaction** When a user wants to make a payment, they can do so by selecting the payee’s VPA (e.g., merchant@bankname), scanning a QR code, or entering their UPI ID. For instance, if a customer wants to pay a local merchant, they can simply scan the merchant’s QR code or enter the merchant’s VPA. ### **Step 4. Transaction Processing**: Once the UPI PIN is entered, the app sends the payment request to the UPI server. The server verifies the request and processes it by communicating with the user’s bank (the issuer) and the recipient’s bank (the acquirer). ### **Step 6. Settlement** The UPI system ensures the funds are settled between banks within a short time frame, usually within a few hours, although users see the transaction reflected in their accounts immediately. This seamless process, facilitated by apps like PhonePe, Google Pay, and Paytm, makes UPI an efficient, secure, and convenient method for digital transactions, contributing to its widespread adoption in India. _**Related Read: [Bima ASBA by IRDAI: A Game-Changer for UPI Insurance Payments](https://razorpay.com/blog/irdai-bima-asba-new-upi-based-payment-system-for-insurance-premiums/)**_ ## How to Start Using Unified Payments Interface (UPI) Payments in India? - Ensure you have a smartphone with a reliable operating system that can support UPI-enabled applications. - You must have an active bank account with a bank that offers UPI services. - Make sure your mobile number is linked to your bank account for verification purposes. - A stable internet connection is essential to use UPI services effectively. ### **Step 4: Initiate UPI Transactions** 1. To send money, select the option to send funds and enter the recipient’s VPA or mobile number. Verify the recipient’s details. 2. Enter the amount you wish to send and add an optional note if required. ### **Step 5: Receiving UPI Payments** 1. To receive money, simply provide your VPA to the sender. 2. Once the sender initiates the transaction, you’ll receive a notification. 3. The funds will be instantly credited to your linked bank account.
- blog.orbitremit.com › what-is-upi-india-guideEN
What Is UPI? India's Real-Time Payment System Explained
UPI stands for Unified Payments Interface — a real-time payment system developed by the National Payments Corporation of India (NPCI) and ...
- bbc.com › news › articles › c8xnwqe00v1oEN
UPI: India built a digital payments miracle. Now comes the bill. - BBC
# India built the world's biggest digital payments miracle. Now comes the bill Scan a QR code, tap a few buttons and the money moves instantly. There is no card machine, no cash, and - most importantly - for the user, no visible fee. India has [paved the way](https://thewire.in/banking/lok-sabha-passes-bill-allowing-govt-to-permit-banks-others-to-charge-for-upi-transactions) for banks and payment companies to charge merchants a fee on UPI transactions, potentially ending a decade-long experiment in free digital payments. The government [says](https://www.pib.gov.in/PressReleasePage.aspx?PRID=2296594®=48&lang=2) consumers and person-to-person UPI payments will remain free. If merchant fees are introduced, they will apply only to some transactions above a set threshold, at a nominal rate, meaning most UPI payments will remain free. The system is run by the National Payments Corporation of India, a non-profit entity, with banks and technology companies providing the consumer-facing services. A vegetable seller, taxi driver or small shopkeeper does not need to buy a card terminal to accept UPI. A printed QR code will do. UPI may feel free, but it is not costless. Servers have to run, transactions settled, fraud detected and the system protected against cyberattacks. "Even a small fee could matter if it changes the incentives of small merchants operating on thin margins," he says. A fee imposed on a large retailer is very different from one imposed on a tiny shop or informal trader.
- dbs.bank.in › digibank › in › articlesEN
What is UPI - How UPI Works, Features & Benefits - DBS Bank
UPI is a simple platform to send and receive money instantly. Learn UPI full form, how it works, key features, and its benefits for seamless ...
- insightsonindia.com › 2026 › 09 › 01EN
The Unified Payments Interface (UPI) - INSIGHTS IAS
**Context:** The Unified Payments Interface ( [UPI](https://www.insightsonindia.com/2026/08/13/upi-at-10-indias-digital-payments-revolution-and-the-road-ahead/)) cemented its role as the backbone of India’s digital economy, processing 2,366 crore transactions worth nearly ₹30 lakh crore in July 2026 alone. The Unified Payments Interface (UPI) **What It Is?** - **UPI** is an advanced, real-time interoperable payment system that enables instantaneous inter-bank fund transfers directly through mobile applications. Built as an open-architecture digital public infrastructure, it converts a user’s complex bank account details into a simple, secure virtual payment alias ( [Virtual Payment Address](https://www.insightsonindia.com/2025/12/05/digital-hub-for-reference-and-unique-virtual-address-dhruva/) or UPI ID). - **Payment Initiation via Virtual Alias:** The sender inputs the recipient’s UPI ID (e.g., shankar@flutebank) or scans a QR code on a Third-Party Application Provider (TPAP like Google Pay/PhonePe) connected through a [Payment Service Provider](https://www.insightsonindia.com/2024/02/09/payment-aggregators/) (PSP) bank. - **User Authentication:** The TPAP routes the transaction token to the NPCI central switch, which prompts the sender to authenticate the request by entering their secret 4- or 6-digit **UPI PIN** on a secure encrypted library. - **Inter-Bank Switching & Routing:** Once the remitter bank approves the debit, the NPCI central switch directs the instruction to the recipient’s bank ( [Beneficiary Bank](https://www.insightsonindia.com/2026/08/31/upsc-mains-2026-gs-paper-3-complete-question-wise-synopsis-for-all-20-questions/)) mapped to that specific UPI ID alias. - **Real-Time Settlement & Confirmation:** The remitter bank deducts the amount, the beneficiary bank instantly credits the recipient’s account, and a simultaneous confirmation message is relayed back through NPCI to both users’ mobile apps. **Key Features of UPI:** - **Virtual Payment Address (VPA / UPI ID):** Eliminates the need to share sensitive financial data (such as bank account numbers, IFSC codes, or net-banking passwords) by using aliases. - **24/7/365 Real-Time Settlement:** Operates continuously with zero downtime, built over the [Immediate Payment Service](https://www.insightsonindia.com/2026/08/13/upi-at-10-indias-digital-payments-revolution-and-the-road-ahead/) (IMPS) messaging backbone. - **Single App Multi-Banking:** A single UPI mobile application can link multiple bank accounts from different institutions, allowing users to choose source accounts on demand. - **Advanced Capabilities (UPI 2.0):** Supports recurring mandates (autopay), pre- [approved credit lines](https://www.insightsonindia.com/2026/05/06/emergency-credit-line-guarantee-scheme-eclgs-5-0/), overdraft account linking, invoice verification before payment, UPI Lite for offline small-value transactions, and conversational AI-driven voice payments.