Unified Payments Interface (UPI)

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Unified Payment Interface (UPI) is an instant payment system that helps when you transfer funds between 2 parties through a mobile platform. Unified Payments Interface (UPI) is an Indian instant payment system and protocol developed by the National Payments Corporation of India (NPCI) in 2016. The interface facilitates inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions, allowing users to instantly transfer funds between two bank accounts using mobile devices. UPI operates as an open-source application programming interface (API) on top of the Immediate Payment Service (IMPS) and is regulated by the Reserve Bank of India (RBI). The top UPI apps in India are PhonePe, Google Pay and Paytm. Majority of the UPI transactions are done via these apps.

Adoption and Impact

  • Indian Banks started making their UPI-enabled apps available on Google Play on August 25, 2016.
  • UPI has positioned India as the global leader in instant payments.

UPI 2.0

On 16 August 2018, UPI 2.0 was launched, which enabled users to link their overdraft accounts to a UPI handle. Users were also able to pre-authorise transactions by issuing a mandate for a specific merchant. From 8 June 2022, RBI allowed linking RuPay credit cards with UPI. Customers can now make credit card payments using UPI, in the absence of a physical card. RBI on 6 April 2023 proposed allowing credit on UPI through pre-approved bank lines which would help customers reduce their dependence on credit cards.


The RBI governor Shaktikanta Das launched the service called UPI 123PAY on 8 March 2022. UPI 123PAY has four options for payment.

  1. App-based functionality where a mobile phone manufacturer can install a UPI app through over-the-air programming, that can be used for payment.
  2. Missed calls based: where a customer can use a dedicated merchant payment number by giving a missed call. The incoming authentication call will ask for PIN verification to complete the transaction.
  3. Interactive Voice Response (IVR) based where the payment transaction will be completed using pre-defined phone numbers.
  4. Payment in offline mode through sound-based proximity data communication.