UPI Full Form - Unified Payments Interface

What is UPI? The full form of UPI is Unified Payments Interface. The Unified Payments Interface (UPI) technology unifies various banking functions, smooth fund routing, and merchant payments under one roof by enabling numerous bank accounts into a single mobile application (of any participating bank).

Additionally, it supports "Peer to Peer" collection requests, which can be planned and funded according to convenience and necessity. With 21 member banks, NPCI carried out a trial launch while keeping the aforementioned circumstances in mind. The RBI Governor in Mumbai, Dr. Raghuram G. Rajan, launched the pilot program on April 11, 2016. Beginning on August 25, 2016, banks have been uploading their UPI-enabled apps to the Google Play store.

How UPI is Performing

In terms of users and transactions, it is among the most popular payment systems globally. The platform boasted over 300 million active monthly users in India as of November 2022. With an average value of ₹1,849 per transaction, the percentage of UPI transactions in the overall volume of digital transactions increased from 23% in 2018–19 to 55% in 2020–21. In 2022, it made over 2,348 transactions possible every second.

A number of news stories and reports regarding the BFSI sector were published in August 2023. 10.5 billion transactions were registered on the platform in August 2023, up from 9.9 billion in July 2023, according to data from the NPCI. UPI has completed over 10 billion transactions as of August 2023. In August, UPI recorded ₹15.7 lakh crore, marginally surpassing the record of ₹15.3 lakh crore set in July. The total value of transactions in FY 2023 was $1.7 trillion, of which $380 billion came from merchant payments.

Numerous nations, including France, Australia, Singapore, United Arab Emirates, Oman, Saudi Arabia, Nepal, Bhutan, Sri Lanka, and others, have received UPI technology from India.

Internationalization of UPI

In 2021, almost 777 million Indian consumers made cross-border purchases. On November 17, 2021, NPCI International Payments Limited (NIPL) and UK-based PPRO Financial signed a memorandum of understanding (MoU) to facilitate payments and increase the acceptance of UPI in international markets, particularly those in China and the US, which account for half of all international transactions originating from India.

Transact365, a UK-based fintech startup, enabled UPI for international merchants on January 26, 2022. This feature allows merchants to convert currencies in real time and conduct business in India without the need for a local presence. Banks, payment service providers (PSPs), and third-party application providers (TPAPs) in India are required by the NPCI and RBI to offer worldwide acceptance through UPI starting on September 30, 2022.

In accordance with bilateral treaties, the RBI will promote the globalization of UPI with countries that use the US dollar, British pound sterling, and the euro starting on June 17, 2022, with the publication of the Payments Vision 2025 paper. Because of geopolitical concerns, the Ministry of External Affairs (MEA) is also aggressively promoting UPI's internationalization.

However, a number of nations, notably Canada, are hesitant to adopt UPI because of resistance from American businesses. In the event that other countries have a system comparable to UPI, MEA is seeking cooperative efforts to move funds from one central bank to another utilizing UPI as the conduit. India made UPI and related technology available to the Commonwealth of Nations on October 12, 2022.

PhonePe declared on February 7, 2023, that it will be extending UPI capability for international payments to the United Arab Emirates, Singapore, Mauritius, Nepal, and Bhutan. Users will have the ability to make direct payments from Indian bank accounts in foreign currencies. On April 27, 2023, NIPL and PPRO Financial finalized a deal that will allow international payment service providers (PSPs) and worldwide merchant acquirers to accept UPI.