UPI@10: Transforming Payment Methods Across Companies and Sectors
MUMBAI: The Unified Payments Interface (UPI) has transformed the landscape of real-time payments, accounting for nearly half of such transactions globally. Launched in April 2016, UPI has seen a staggering growth from 1.8 crore transactions in FY17 to an anticipated 24,162 crore transactions by FY26, marking an increase of 13,000 times over the decade.
Origins of UPI
The concept of UPI emerged from a need to enhance the Immediate Payment Service (IMPS), which was initially designed for person-to-person transfers. AP Hota, the founding chief of the National Payments Corporation of India (NPCI), noted that the challenge was to create a system that allowed merchants to receive payments instantly, a feature that traditional card payments could not provide. The initial brainstorming sessions revealed that a redesign of IMPS was necessary to simplify merchant payments and involve non-bank payment providers.
Hota explained that UPI was developed to address these needs while adopting open-source technology and APIs. This shift led to the creation of a new solution that retained the real-time settlement engine of IMPS but was tailored for a broader range of transactions.
Development and Implementation
Key figures in UPI’s development included Pramod Verma, who contributed to the API-driven architecture, and Nandan Nilekani, who served as a technology and public policy adviser. Together, they envisioned a decentralized, open protocol that would allow real-time resolution of payment addresses across participating banks. This design choice was crucial for UPI’s scalability.
Dilip Asbe, the current chief of NPCI, who was COO during UPI’s launch, emphasized the importance of a phased rollout. The platform began with basic peer-to-peer transfers and gradually introduced advanced features, such as recurring mandates. Hota had predicted in his 2017 farewell speech that UPI would reach a billion transactions a day within a few years.
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