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The Unified Payments Interface (UPI)

 GS Paper 3

Syllabus: Indian Economy and related issues


Source: IE 

Direction: The article discusses UPI and the latest NPCI rules, which affect both major and small payment apps.


Context: The National Payments Corporation of India (NPCI) has extended the deadline for platforms using UPI to meet its 30% market share cap by two years.

Background: The NPCI’s market cap rules limit any single payments app from processing more than 30% of UPI transactions in a month.

About Unified Payments Interface (UPI):

    • UPI is a technology that consolidates various bank accounts into a single mobile app (of any participating bank) –
      • Providing an instant real-time payment system,
      • Allowing users to transfer money across multiple bank accounts without revealing details of one’s bank account to the other party.
    • It was launched by the NPCI in 2016 in conjunction with the Reserve Bank of India (RBI) and the Indian Banks Association (IBA).

Features and benefits of UPI:



Performance of UPI:

    • The UPI transaction value for the month of October (2022) touched a new high at Rs 12.11 lakh crore, with the transaction count touching 7.3 billion.
    • According to the RBI’s Payment Vision 2025, UPI is expected to register an average annualised growth of 50%.


Why this extension? Taking into account the current usage and future potential of UPI, other existing and new participants (banks and non-banks) have adequate time to upscale their consumer outreach for the growth of UPI and achieve overall market equilibrium.


Impact of this move:

    • The 30% limit will deny UPI payment services to millions of Indians, undermining the spectacular development narrative of Indian digital payments.
    • It recognizes that existing and new UPI firms must commit more time, effort, and money to expand their own UPI market share.

Who will benefit and who will suffer from the extension?

  • Beneficiaries: PhonePe and Google Pay, which currently command a majority (80%) of the UPI market share.
  • Sufferers: Paytm (market – 15%), WhatsApp Pay and other market players.

●        It is an umbrella organisation incorporated in 2008 as a “Not for Profit” Company under the Companies Act 1956 (now Section 8 of the Companies Act 2013).

●        It is an initiative of RBI and IBA under the provisions of the Payment and Settlement Systems Act, 2007, for creating infrastructure for the entire Banking system in India for physical as well as electronic payment and settlement systems.

Insta Links:


Mains Links:

Q. What is the Unified Payments Interface (UPI)? What are its advantages over other cashless transaction methods? Why is UPI significant to the Indian economy?


Prelims Links:

Consider the following statements about Unified Payments Interface (UPI):

  1. It is an instant real-time payment system jointly developed by the National Informatics Centre (NIC) and the Centre for Development of Advanced Computing (C-DAC).
  2. It caters to the “Peer to Peer” collection request which can be scheduled and paid as per requirement and convenience.

Which of the given above statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2


Ans: (2)



  • Unified Payments Interface (UPI) is an instant real-time payment system developed by the National Payments Corporation of India facilitating inter-bank transactions. The interface is regulated by the Reserve Bank of India and works by instantly transferring funds between two bank accounts on a mobile platform.
  • It also caters to the “Peer to Peer” collection request which can be scheduled and paid as per requirement and convenience.


Refer: After Bhutan adopts India’s Bhim UPI