MEF CEO Dario Betti reflects on the success of the state supported mobile centric payment platform in India, UPI. With 350 million compatible users and billions of dollars’ worth of transactions the immediate payment solution is now being noted as potential blueprint for other markets. UPI has shown the way on linking multiple solutions together and reaching out to the large population in India. It seems now to be aiming to an international market as well.

The Indian government has created a winning platform for its digital payment solutions the Unified Payments Interface (UPI). This could become a clear model for many other national solutions, if not an international framework for mobile based immediate payments.

UPI was launched in 2016 as an instant payment system reference based on mobile phone. UPI is an interface to facilitate interbank person to person and person to merchant payments that use the registration of mobile number with a bank. The platform had over 350 million monthly active users in India. It hit a record of 9 billion Transactions in May 2023, only to overtake the 10 billion transaction per month mark in July. The service is growing fast: in 2022 transaction worth 1.7 billion dollars went through UPI, an increase of 42% on the previous year, and 2023 seems to promise to keep breaking records.

Any UPI app can be used to transfer funds from and to UPI enabled banks, but also includes many OTT services including PhonePe, Google Pay, Paytm, Amazon Pay, Airtel Payments Bank, MobiKwik, Samsung Pay, WhatsApp Pay, and the state’s own solution BHIM. By the beginning of 2022 there were over 380 banks linked to UPI platform.  Currently the payment PhonePe represents that largest transaction value going through the system (49%), followed by Google Pay (34%) and PayTM (10%) a distant third. The government is trying to encourage more fragmentation into the transaction volumes, and it is discussing solution to limit PhonePe and Google Pay growth via a market cap. These will be discussed until 2024 it seems. While the system is available for many, market forces have not generated an equal playing field it seems.

The platform had over 350 million monthly active users in India. It hit a record of 9 billion Transactions in May 2023, only to overtake the 10 billion transaction per month mark in July. The service is growing fast: in 2022 transaction worth 1.7 billion dollars went through UPI, an increase of 42% on the previous year, and 2023 seems to promise to keep breaking records.”

The success of the solution can be seen by its adoption on mobile phones. Samsung integrated a UPI barcode scanner function directly into mobile camera application for faster payment. From 2021, Apple’s iPhone, iPad, and iPod Touch in India can use UPI on App Store and iTunes Store. From 2021, Netflix integrated UPI for its Indian subscribers which were until then limited to credit and debit cards payments. The satellite pay TV platform Direct TV soon followed to use it for its own subscription services.

Sony launched UPI payment in January 2022, and the mobile operator Jio introduced UPI AutoPay for prepaid and post-paid mobile subscribers on the same month. More features have been deployed since. For instance, Google Play started supporting UPI AutoPay for subscription services from November 2022, while the Play store was already enabled for single purchasing apps, games, and in-app content in 2019. Other use cases are also emerging, such as the Bangalore Metropolitan Transport Corporation (BMTC): it is due to start accepting UPI based ticketing from 2023.

The system has also gathered international support, with countries offering interconnection of different services from remittance to point of sales payments. Southeast Asian and Middle Eastern countries have already initiated interoperability with their systems and UP.

Talks with countries with large Indian expatriates’ presence such as the United Arab Emirates and Singapore, have begun but the potential of facilitating the ease of payment for Indian tourists traveling abroad is also growing in importance for countries in the region. More recently, European countries have also started accepting UPI: the French payment company Worldline will enable POS to support UPI, starting in 2023 with Belgium, Netherlands, and Switzerland. PayXpert in UK should provide all its POS with QR code facilities to support UPI.

The Financial Times has reported in August 2023 that India intends launching voice-based and offline digital payments (“conversational payments”) to expand the reach of the UPI into the country’s urban areas where digital infrastructure and literacy are both lacking. Only 15% of the population in urban areas seem to have access to reliable Internet services, and illiteracy is still common with over 300 million people unable to read or write. The availability of an offline solution based on voice commands would significantly increase the reach of the solutions.

MEF CEO