UPI’s Expansion Playbook: Navigating Product Diversification and International Growth
- Kshitija Kaur and Chinmayee Kadam
- 5 mins read
- Digital Finance, Partnerships
Table of Contents
UPI: From Indian Innovation to International Influence
If there’s one Indian fintech marvel reshaping how the world sees digital payments, it’s the Unified Payments Interface (UPI). Introduced by the National Payments Corporation of India (NPCI) in 2016, UPI’s genius lies in its simplicity: seamlessly linking multiple bank accounts to a single mobile app, allowing users to send money, pay merchants, and engage with the digital economy with just a virtual payment address or phone number. With a swipe here and a tap there, UPI has levelled the playing field, extending its reach into remote regions over time through product diversification plays like UPI Lite and UPI 123Pay.
And the numbers don’t lie either—₹20.64 trillion in transactions in September 2024 alone, with a staggering 45% annual growth in transactions and 622 banks now live on UPI. India’s UPI continues to break records, with transaction volumes soaring by 52% year-on-year, reaching an astounding 78.97 billion transactions in the first half of 2024. Additionally, the total transaction value surged by 40%, showcasing the widespread and growing adoption of UPI for high-value transactions. But India’s ambitions don’t stop at home. The Reserve Bank of India has designated the global rollout of UPI and RuPay cards under its ambitious Payments Vision 2025, taking this powerhouse global as part of its goalpost of “Internationalisation” – aiming to expand UPI’s reach to 20 countries by FY29.
In this blog, we’ll uncover how UPI’s revolution is scaling, both in geography and product innovation, and what that means for the future of digital payments.
UPI's Product Journey: Building Blocks of Digital India
UPI has transformed the digital payments landscape in India, emerging from its humble beginnings in 2016 as a simple peer-to-peer (P2P) and peer-to-merchant (P2M) payment platform. UPI has since evolved into a multi-faceted ecosystem that supports not only payments but also an array of credit products.
- At its inception, UPI’s primary focus was on facilitating basic transactions, but with the launch of BHIM (Bharat Interface for Money), UPI became a household name, enabling seamless and quick payments through a dedicated mobile app.
- Fast forward to 2018, and UPI 2.0 added a new layer of functionality by introducing overdraft facilities, one-time mandates, invoicing, and QR-based payments, making it a more versatile tool. By 2020, UPI Autopay empowered users to set up recurring payments, such as for bills and subscriptions, solidifying UPI’s role in everyday financial activities.
- In 2022, NPCI further expanded its reach with UPI123Pay, making digital payments accessible to feature phone users, alongside other innovations like linking RuPay credit cards to UPI and UPI Lite for low-value transactions.
- In 2023, UPI unveiled its much-anticipated Credit Line, transforming credit access via pre-sanctioned lines directly through UPI. This year also saw the debut of voice-enabled payments via Hello! UPI, NFC-based Tap & Pay, and AI-driven Conversational UPI Payments, amongst others.
As of 2024, UPI has extended its reach beyond India with UPI One World, allowing seamless payments for foreign nationals visiting the country. It has also introduced Pay Later on UPI, integrating the popular ‘Buy Now, Pay Later’ model, and UPI Circle, which empowers primary account holders to securely delegate payment responsibilities to trusted secondary users, further enhancing flexibility and usability in financial transactions. We’ve included more details on the Credit-line on UPI initiative in our blog of the key takeaways from the Global Fintech Fest 2024.
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UPI Goes Global: Stepping Beyond Borders
With the success of UPI in India, the next step is a strategic global expansion driven by the RBI’s Payments Vision 2025. Aiming for “Internationalisation” as one of its core goals, India’s push for UPI on the world stage is twofold: the facilitation of cross-border remittances and the global adoption of UPI-based QR payments. Driven by RBI’s goal of Viksit Bharat 2047 in tandem with NPCI International Payments (NIPL), India plans to roll out UPI across 20 countries by FY29. The initiative promises seamless payments for tourists, efficient remittances, and enhanced cross-border trade efficiency.
- First, UPI’s acceptance network is rapidly expanding beyond India through QR-based payments, enabling international markets to offer UPI as a primary payment method. Countries such as Bhutan, France, Oman, and Qatar are already adopting UPI, making it easier for Indian travellers to transact in rupees. In Europe, France and the UK have adopted UPI’s payment system, with agreements in place to enable in-store and online payments via QR codes and even RuPay cards.
- Second, NIPL’s partnerships with financial institutions and equivalent payment systems across regions—such as Malaysia’s Merchantrade Asia, UAE’s LuLu Financial Holdings, and Greece’s Eurobank—focus on enabling real-time remittances to India via UPI, benefiting the vast Indian diaspora. These collaborations allow seamless transfers, demonstrating UPI’s capability to simplify complex cross-border transactions. Countries like Singapore have taken this a step further, by linking its domestic real-time payment system—PayNow—with UPI, enabling instant cross-border transfers between India and Singapore.
The timeline of UPI’s “world tour” showcases this dual approach: expanding UPI’s acceptance for retail and merchant payments on the one hand, and strengthening UPI’s real-time cross-border remittance framework on the other. This cohesive strategy not only caters to Indian users abroad but also opens up the digital payments landscape for foreign merchants and banks, further solidifying UPI’s global footprint.
UPI Unleashed: Navigating Global Growth with Payments Vision 2025
UPI’s journey, with a focus on internationalisation and product diversification, reflects a well-rounded strategy for sustained growth. With its internationalisation efforts accelerating, expanding the international network will require closer regulatory alignment across borders, ensuring seamless interoperability. Strengthening security frameworks to tackle evolving cyber risks is crucial as UPI scales globally. Additionally, diversifying its product offerings while maintaining simplicity will be vital in meeting diverse market needs. With the RBI’s Payments Vision 2025 Plan leading the charge, the future of UPI on the global stage will be one to watch closely, setting the stage for India’s innovation to influence digital economies worldwide.
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Authors
Kshitija is a senior branding associate at WhiteSight, crafting branding strategies and fintech content. When she's not conjuring up new ideas for the company, you can find her dabbling in new hobbies and documenting her experiences through writing and short films.
Chinmayee Kadam
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