Search results for how does UPI payment work in India explained explained explained 2026

1. Een.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. [[12]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-12) Furthermore, the successful execution of an instant payment system at such an enormous scale has made it a [soft power](https://en.wikipedia.org/wiki/Soft_power) tool for India[[13]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-13) and is often cited as the most transformative and successful financial technology innovation India has developed. [[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. [[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 [[14]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-:1-14) [[20]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-20)[[21]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-:4-21) 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. [[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) [[23]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-23) [[24]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-24) [[27]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-:6-27)[[28]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-28) [[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. [[31]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-31) In partnership with the NSDL Payments Bank and NPCI, ToneTag launched VoiceSE, which will enable 40 crores (400 million) feature phone users to make UPI payments using voice in [Hindi](https://en.wikipedia.org/wiki/Hindi), [Telugu](https://en.wikipedia.org/wiki/Telugu_language), [Tamil](https://en.wikipedia.org/wiki/Tamil_language), [Malayalam](https://en.wikipedia.org/wiki/Malayalam), [Kannada](https://en.wikipedia.org/wiki/Kannada), and [Bengali](https://en.wikipedia.org/wiki/Bengali_language) languages. [[32]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-32) Currently, around 70% of UPI users are from places other than Tier-1 cities with over 80% of newly registered users originating from Tier-2 cities. [[33]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-33) On 8 August 2024, RBI suggested raising the UPI tax payment ceiling from ₹1 lakh to ₹5 lakh. [[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) ## Internationalization [[132]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-132) On 26 January 2022, UK based fintech startup Transact365 enabled UPI for global merchants with real time currency conversion facility that will help them do business in India independent of local presence. [[133]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-133) As per NPCI and RBI mandate, banks, payment service providers (PSPs) and third-party application providers (TPAPs) in India must enable international acceptance through UPI from 30 September 2022. 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). [[171]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-171) [[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. [[173]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-173) [[175]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-175) On 4 August 2021, [ICICI Prudential Life Insurance](https://en.wikipedia.org/wiki/ICICI_Prudential_Life_Insurance) started supporting UPI AutoPay feature for insurance payment. [[176]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-176)[[177]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-177) [[178]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-178) From 31 August 2021, [Netflix](https://en.wikipedia.org/wiki/Netflix) integrated UPI AutoPay feature for Indian subscribers which was until now limited to credit and debit cards from [Visa](https://en.wikipedia.org/wiki/Visa_Inc.), [Mastercard](https://en.wikipedia.org/wiki/Mastercard), [American Express](https://en.wikipedia.org/wiki/American_Express), and [Diners Club International](https://en.wikipedia.org/wiki/Diners_Club_International). [[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. [[181]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-181) 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. [[186]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-186) [Bangalore Metropolitan Transport Corporation](https://en.wikipedia.org/wiki/Bangalore_Metropolitan_Transport_Corporation) (BMTC) & [Tamil Nadu State Transport Corporation](https://en.wikipedia.org/wiki/Tamil_Nadu_State_Transport_Corporation) (TNSTC) will start UPI based ticketing system from 2023. [[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. [[188]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-188) [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. For all MTC buses, the Tamil Nadu Infrastructure Development Board (TNIDB) intends to implement a QR-based ticketing system for UPI payment. [[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. [[192]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-192) 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. [[194]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-194) 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). [[197]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-197) 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. [[198]](https://en.wikipedia.org/wiki/Unified_Payments_Interface#cite_note-198)
2. Iinvestopedia.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.? 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. ## Is UPI Safe in India? It is regulated by India's central bank, the Reserve Bank of India. ## 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.
3. Rredcompasslabs.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.
4. Yyoutube.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 ...
5. Sstripe.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). ## How does UPI work? ### How to send and receive payments To get started with UPI payments, you’ll need a VPA, commonly called a UPI ID. This is usually in the format name@bank or mobilenumber@provider. This ID links to your bank account and is used to send and receive money via UPI. UPI supports multiple ways to initiate payments: ### 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.
6. Tthehindu.com › sci-tech › science › what-goes-on-behind-the-screen-when-you-pay-through-upi-explainedEN

   What goes on behind the screen when you pay through UPI? | Explained

   # What goes on behind the screen when you pay through UPI? | Explained ## UPI enables instant bank-to-bank payments by connecting users’ apps and banks through a system operated by the National Payments Corporation of India; launched in 2016, it has grown into a massive digital payments network and is now being adopted in several countries Published - September 01, 2026 08:15 am IST [](https://www.thehindu.com/profile/author/vasudevan-mukunth-1971/) [Vasudevan Mukunth](https://www.thehindu.com/profile/author/vasudevan-mukunth-1971/) 0 READ LATER [SEE ALL](https://www.thehindu.com/myaccount/?tab=bookmarks) Remove  Across the 2025-26 financial year, UPI handled 24,160 crore transactions worth ₹314 lakh crore, accounting for 85% of the country’s digital payment transactions by volume | Photo Credit: Getty Images The [Unified Payments Interface](https://www.thehindu.com/business/Economy/upi-completes-10-years-clocks-nearly-13000-fold-rise-in-transaction-volume/article71384088.ece) (UPI) is India’s preeminent digital payments system. In July 2026 alone, it processed 2,366 crore transactions — or around 7,600 transactions per second — in total worth nearly ₹30 lakh crore. Across the 2025-26 financial year, UPI handled 24,160 crore transactions worth ₹314 lakh crore, accounting for 85% of the country’s digital payment transactions by volume. According to the International Monetary Fund, UPI also accounted for a stunning 49% of all real-time payments worldwide in 2025. #### How does UPI work? Say Selvi has an account in Violin Bank and Shankar has an account in Flute Bank. Selvi wants to send Shankar ₹100 via UPI. First, Selvi tells her UPI app — which could be Google Pay, PhonePe, etc. — whom she wants to pay. Obviously the app will not understand who ‘Shankar’ is. Instead, she will have to tell the app in a language the app understands. In this language, Shankar’s identity has two parts: his unique name and his unique bank name. So it will be something like shankar@flutebank. This UPI ID will be connected to Shankar’s bank account. In technical terms, the ID is an alias of the account. So when Selvi tells her UPI app that she needs to send money to shankar@flutebank, the app will know which account the money should go to. Second, the app will send a payment request to the UPI system. UPI is operated by the National Payments Corporation of India (NPCI). It provides the switching and routing infrastructure that links the 730 or so participating banks, allowing users to transfer money between accounts at these banks. The UPI system will respond to Selvi’s app’s request by asking Selvi to authenticate the transaction. This is like a confirmation: “Let me make sure you want this transaction to happen.” Selvi will do this by entering her UPI PIN. Now the system will know she has signed off on it. The third step is for the actual transaction to happen. Selvi’s bank, which is Violin Bank, will check the transaction. This involves asking questions such as whether Selvi’s account is valid, has enough money, if the request is authentic, if the transaction limit has been reached, and if the transaction shows any signs of fraudulent activity. If the check passes all tests, Violin Bank will let the UPI system know that it is ready to execute the transaction. Fourth, the UPI system will route the transaction to Flute Bank, which is Shankar’s bank, and into the account associated with shankar@flutebank. Fifth, Violink Bank will deduct ₹100 from Selvi’s account and Flute Bank will add ₹100 to Shankar’s account. Sixth, and finally, Flute Bank will report the addition to the UPI system, which will then relay it to Violin Bank, and finally to the UPI app in Selvi’s hand. #### UPI — past, present, future The NPCI built the UPI system with entrepreneur and Infosys co-founder Nandan Nilekani as an advisor and with the Reserve Bank of India (RBI) providing regulatory guidance. Its foundation was as an interoperable layer over the Immediate Payment Service (IMPS), which is a system to quickly transfer funds from one bank to another round the clock. Then RBI Governor Raghuram Rajan piloted UPI in April 2016 with 21 banks, with the service also becoming available via the banks’ apps a couple months later. UPI 2.0 followed in mid-2018 with new features like linking overdraft accounts, adding mandates (authorising periodic transactions into the future), verifying invoices before payment, signed QR codes (to better verify merchants before transactions), and enhanced autopayments. The UPI system crossed 100 crore transactions per month in October 2019. NPCI International Payments, Ltd. (NIPL) is a wholly owned subsidiary of the NPCI whose job is to facilitate international adoption of India’s digital payments systems, especially UPI. In 2021, NIPL and the Royal Monetary Authority of Bhutan enabled UPI in the kingdom — the first foreign adoption. NIPL is reportedly also working on making UPI interoperable with the payment systems of Indonesia, Malaysia, and Thailand. content frame **An error has occurred** _This is one of 500+ premium articles we publish monthly._ **Register for free** _to continue reading this article and discover more of what we offer._ ### **Weekly newsletters** _Enjoy our editors’ picks, straight from your inbox._ ### **Expert interactions** _Join all open webinars, Live insights and Q&A sessions._ ### **Exclusive entry into our digital library.** _7-day unlimited trial._ _Explore our subscriber-exclusive e-books for free._ Resume reading immediately after. No subscription needed. Already a subscriber? login Sign up/login to unlock Published - September 01, 2026 08:15 am IST Read Comments 0 READ LATER [SEE ALL](https://www.thehindu.com/myaccount/?tab=bookmarks) Remove [](https://www.google.com/preferences/source?q=https://www.thehindu.com/) ### Related Topics [The Hindu Explains](https://www.thehindu.com/topic/The_Hindu_Explains/) / [banking](https://www.thehindu.com/tag/813-810-684/) / [computing and information technology](https://www.thehindu.com/tag/760-684/)   1 / 0Photos THE HINDU 360: புதிய தமிழ் YouTube சேனல் [https://youtu.be/AdQxxh3ULhE](https://youtu.be/AdQxxh3ULhE) 0 seconds of 1 minute, 29 secondsVolume 0% Press shift question mark to access a list of keyboard shortcuts Keyboard ShortcutsEnabledDisabled Shortcuts Open/Close/ or ? 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7. Bblog.orbitremit.com › what-is-upi-india-guideEN

   What Is UPI? India's Real-Time Payment System Explained

   UPI connects hundreds of Indian banks through a single interface. The money leaves your account and appears in the recipient's account within ...
8. Rrazorpay.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? To ensure seamless digital transactions using UPI, a few fundamental prerequisites need to be in place: - 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. 3. Confirm the transaction using your UPI PIN. ### **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.
9. Jjiraaf.com › blogs › personal-finance › what-is-upiEN

   What Is UPI? Everything You Need to Know About Digital Payments - Jiraaf

   6 days ago · Unified Payments Interface or UPI is a real-time digital payment system that lets you transfer money directly between bank accounts using ...
10. Bbbc.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&reg=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. Fintech apps such as PhonePe and Google Pay account for most UPI payments. UPI is not merely big. 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. "Our study suggests that merchant acceptance is not just a result of UPI growth, but one of its key drivers," Motheram says. One option reportedly under discussion would target transactions above 2,000 rupees at larger merchants, leaving small businesses and low-value payments untouched. UPI may feel free, but it is not costless. Servers have to run, transactions settled, fraud detected and the system protected against cyberattacks. For years, the government has helped compensate banks and payment firms for providing a service that has effectively been treated as public infrastructure. But the economics become trickier the further down the merchant chain a fee travels. "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.