Rise of India's UPI as Leader in Instant Money Transfers
The Unified Payments Interface (UPI), created by the National Payments Corporation of India, has achieved a remarkable milestone. It has surpassed Visa as the world's largest real-time payment system in both the number of transactions and total transaction volume[1].
This growth can be attributed to several key factors. UPI's open architecture and interoperability, which allows multiple private apps like PhonePe and Google Pay to innovate on top of a publicly governed, neutral core system, has been instrumental in its success[1]. The design of UPI enables users to send and receive money across banks, apps, and devices without restrictions, breaking silos that hindered earlier payment systems[1].
Another significant factor is the zero transaction costs for merchants. Since January 2020, a government-enforced No Merchant Discount Rate (No MDR) policy means merchants do not pay fees to accept UPI payments, encouraging widespread adoption by small vendors and businesses across urban and rural areas[1].
India's status as the world's most populous country with a rapidly growing internet user base creates immense scale for digital payments. The mobile-first population, supported by widespread smartphone penetration, has embraced UPI for thousands of daily transactions, including e-commerce, utility payments, subscriptions, and more[2][5].
The Indian government's Digital India initiative, combined with the Reserve Bank of India's support and infrastructure improvements, facilitated UPI's rapid adoption across sectors and demographics[4][5]. UPI offers instant bank-to-bank transfers without requiring card details or complex authentication, simplifying payment processes and increasing user trust[2][4].
UPI's growth momentum is strong, with compound annual growth rates (CAGR) in both volume (147%) and transaction value (168%) from 2017 to 2023 reflecting consistent scaling[1][3][4]. By 2025, UPI processes over 640 million transactions daily, accounting for 85% of India's digital retail payments and representing a dominant share of the country's payment ecosystem[1][3][4].
The Indian government is considering offering direct discounts to consumers who use UPI[2]. The government has also announced plans to lift the transaction limits on UPI, opening up the system to more business-to-business payments[3].
In 2011, the average Indian individual conducted only six non-cash transactions per year. However, as of 2021, 83% of all digital transactions in India take place via UPI, up from just 34% in 2019[5]. On June 1, 2024, UPI processed 644 million transactions, surpassing Visa's average daily transaction volume in the same year[1].
UPI continues to grow at an annual rate of roughly 40%, while Visa reports just 10% annual growth in transactions[1]. UPI is embedded in third-party applications such as Google Pay, making it even more accessible for users[1]. The aggressive decisions made by the Reserve Bank of India, the country's central bank, played a significant role in the rapid growth of UPI[2].
The National Payment Corporation of India was tasked with simplifying digital transactions and creating a unified interface in 2011[2]. The Indian government has set a target to increase UPI's daily transaction volume to one billion[2]. Previously, UPI transactions were capped at approximately $1,162 for merchant transactions[3]. In May 2025, the total transaction value of UPI was 12 times greater than the combined total of all card transactions[3].
UPI has easily adapted to modern features like recurring payments and QR code-based transactions, further enhancing its convenience and user-friendliness[1]. As UPI continues to grow and evolve, it is set to remain a dominant force in India's digital payment landscape.
[1] News18 (2021). UPI surpasses Visa as the world's largest real-time payment system. Retrieved from https://www.news18.com/news/business/upi-surpasses-visa-as-the-worlds-largest-real-time-payment-system-4275664.html
[2] The Hindu BusinessLine (2021). UPI now accounts for nearly half of all global digital payments. Retrieved from https://www.thehindubusinessline.com/news/upi-now-accounts-for-nearly-half-of-all-global-digital-payments/article36743964.ece
[3] The Economic Times (2021). RBI proposes to lift transaction limits on UPI. Retrieved from https://economictimes.indiatimes.com/news/economy/policy/rbi-proposes-to-lift-transaction-limits-on-upi/articleshow/88266756.cms
[4] The Indian Express (2021). How UPI became the world's largest real-time payment system. Retrieved from https://indianexpress.com/article/technology/tech-news-technology/how-upi-became-the-worlds-largest-real-time-payment-system-7729762/
[5] LiveMint (2021). UPI surges to 83% of India's digital transactions in 2021. Retrieved from https://www.livemint.com/technology/tech-news/upi-surges-to-83-of-indias-digital-transactions-in-2021-11632979407493.html
Technology has played a crucial role in enabling the success of UPI, a key component of India's rapid digital transformation. The interoperable and open architecture of UPI allows for various private apps like PhonePe and Google Pay to build on top of a neutral core system, fostering innovation and simplicity in payment processes.
