Economy & Markets

The Unified Free Payments Interface (UPI) has completed ten years since its August 2016 public rollout, evolving from a pilot with 21 banks to a dominant financial utility processing over 24,162 crore annual transactions worth approximately ₹314 lakh crore in FY2025-26. This represents a 13,000-fold increase in volume, with the system now accounting for 84% of India's digital payments and nearly 49% of global real-time payment transactions. The network supports 703 to 741 live banks and facilitates daily averages of 66 crore transactions, driven by interoperable architecture that allows seamless transfers across diverse banking applications. Despite this scale, the ecosystem faces significant structural tensions. A duopoly between PhonePe and Google Pay commands close to 80% of transaction volumes, prompting the National Payments Corporation of India (NPCI) to enforce a 30% market share cap per provider, with compliance deadlines extended to December 31, 2026. Furthermore, the zero-Merchant Discount Rate (MDR) policy, which eliminates fees for merchants, has created a fiscal burden on banks bridged by government subsidies exceeding ₹1,11,000 crore, raising questions about long-term financial sustainability as volumes continue to climb. Looking toward the second decade, UPI is expanding into new technological and geographic frontiers. The Reserve Bank of India recently launched a 'tap and pay' facility for RuPay credit cards, enabling offline transactions up to ₹5,000 without OTPs or QR codes to enhance security and convenience. Internationally, the platform operates merchant acceptance in 11 countries and has established sovereign linkages with systems like Singapore's PayNow and the Maldives' Favara, positioning India's Digital Public Infrastructure model as an alternative for the Global South