Ten years ago, paying ₹20 for a cup of tea with a bank-to-bank digital transaction would have seemed unnecessarily complicated. Today, the transaction is often completed before the tea is served.
That change captures the scale of India’s Unified Payments Interface (UPI) revolution better than any abstract discussion about fintech. The QR code has migrated from supermarkets and restaurants to vegetable carts, autorickshaws, neighbourhood kirana stores and roadside stalls. A financial transaction that once required cash, a card machine or bank details has been reduced to three actions: scan, authenticate and pay.
But as UPI completes a decade, the more consequential story is not simply how Indians pay. It is how India built a piece of Digital Public Infrastructure (DPI) capable of operating at population scale, allowed banks and private technology companies to innovate on top of it, and then turned that domestic architecture into an increasingly important instrument of international digital cooperation.
The numbers illustrate the transformation. UPI’s annual transaction volume increased from 1.78 crore in FY2016-17 to more than 24,162 crore in FY2025-26—an increase of almost 13,000 times. The value of transactions climbed from just ₹0.07 lakh crore to around ₹314 lakh crore over the same period. The number of banks live on UPI increased from 44 to 703. According to the government, UPI now accounts for 84% of India’s digital payments and nearly 49% of global real-time payment transactions.
The platform’s monthly numbers are becoming equally extraordinary. In July 2026 alone, UPI processed 2,366 crore transactions worth ₹29.9 lakh crore.
Prime Minister Narendra Modi, marking the tenth anniversary, described UPI’s launch as “a major turning point in India’s digital payments journey” and said that “the sheer scale and reach of UPI are something every Indian must be proud of.”
From 21 banks to a national payments utility
UPI did not begin at anything resembling its current scale. NPCI’s pilot was launched on April 11, 2016, by then RBI Governor Raghuram Rajan with 21 member banks. Banks began making UPI-enabled applications available to customers from August 25 that year.
According to NPCI Managing Director and CEO Dilip Asbe, UPI processed just 374 transactions in its first month and around two crore transactions worth ₹0.07 lakh crore in FY2016-17. It crossed one billion transactions in a month only in October 2019.
That trajectory matters because UPI was not merely another payments application. Its breakthrough lay in the architecture underneath the applications.
Instead of requiring consumers and merchants to belong to the same proprietary network, UPI created interoperable payment rails. A consumer could use one application and bank account to pay a merchant using another application and another bank. The customer did not have to understand—or even see—the complex network of banks, payment service providers and NPCI operating behind the transaction.
The QR code made that architecture visible on the street.
A merchant no longer needed an expensive point-of-sale terminal to enter the digital economy. A printed QR code could turn a tiny shop—or even a cart—into a digital payment acceptance point.
Nandan Nilekani, founding chairman of UIDAI and one of the key figures associated with India’s digital public infrastructure architecture, has described UPI as an “undisputed superstar”. More importantly, he identifies the institutional principle behind its success: India decided to create “public rails for private innovation”, combining sovereign infrastructure with competition and innovation in the market above it.
That distinction is fundamental to understanding UPI.
UPI did not emerge in isolation
It would nevertheless be simplistic to attribute UPI’s rise to a single technology.
Its growth occurred at the intersection of several developments: expansion of bank accounts through Jan Dhan, Aadhaar-based identity infrastructure, rapidly increasing smartphone penetration, cheaper mobile data, growth of fintech applications, direct benefit transfers and a policy push towards formalisation and digitalisation.
The JAM trinity—Jan Dhan, Aadhaar and mobile—provided much of the underlying foundation.
Asbe notes that UPI succeeded because this groundwork had already been laid and because government, RBI, banks, NPCI, fintech companies, startups and industry bodies participated in building the ecosystem.
Two shocks then accelerated behavioural change. Demonetisation in 2016 encouraged consumers and merchants to experiment with alternatives to cash, while the COVID-19 pandemic dramatically increased demand for contactless transactions.
Technology created the capability; circumstances accelerated adoption; interoperability helped turn adoption into habit.
The real revolution happened at the bottom of the market
UPI’s greatest achievement may not be the enormous aggregate value moving through the network. It is the economics of very small payments.
For decades, digital payments worked far better for organised retail than for India’s informal and micro-enterprise economy. Card acceptance required machines, connectivity, commercial arrangements and transaction costs that made little economic sense for a tea seller or vegetable vendor.
UPI compressed that infrastructure into a smartphone and QR code.
According to Asbe, merchants now account for 63% of UPI transaction volume, while about 86% of merchant payments are below ₹500. A Department of Financial Services study cited by him found that 94% of small merchants surveyed accepted UPI and 57% reported an increase in sales after adopting digital payments.
This is where UPI becomes more than a payments story.
A digital payment leaves a transaction trail. For a small merchant with no salary slip, property collateral or conventional credit history, regular digital inflows can potentially help establish economic activity and support access to formal credit.
Asbe argues that the next phase of UPI adoption may therefore be driven less by payments convenience than by access to credit, investments and insurance. If that transition occurs at scale, UPI’s second decade could prove economically more significant than its first.
From Indian infrastructure to global payments architecture
UPI has also become an increasingly visible component of India’s technology diplomacy.
The platform is currently operational in 11 countries. India is pursuing multiple models internationally: enabling Indian travellers to make UPI merchant payments overseas, linking UPI with foreign instant-payment systems, and helping countries develop sovereign payment infrastructure based on UPI technology.
RBI Governor Sanjay Malhotra has outlined three strategic approaches: linking UPI with fast-payment systems in other countries for remittances; enabling cross-border merchant payments through QR codes; and supporting partner countries seeking UPI-like sovereign payment rails.
The UPI-PayNow linkage with Singapore is particularly significant because it demonstrates how domestic real-time payment systems can potentially be connected across borders, reducing friction in remittances.
For India, this has strategic implications. Digital public infrastructure is emerging as an area in which India can offer developing economies an alternative model: interoperable infrastructure that countries can adapt while retaining control over their domestic payment architecture.
The difficult question at 10: who pays for UPI?
The extraordinary scale of UPI, however, has created a problem that its second decade cannot avoid: economic sustainability.
Consumers have become accustomed to UPI payments without transaction charges, while zero Merchant Discount Rate (MDR) helped accelerate merchant acceptance. But servers, cybersecurity systems, fraud detection, bank infrastructure, technology upgrades and payment processing have real costs.
That tension has now moved to the centre of policy debate.
RBI Governor Sanjay Malhotra put the issue succinctly this month: “The costs have to be paid by someone.” He stressed that the priority is to keep strengthening the public infrastructure and investing in its efficiency, while describing discussions about the precise MDR structure as premature.
The government, meanwhile, has stated that consumers will not face UPI transaction charges and person-to-person payments will remain free. It has indicated that if MDR is introduced, it would apply only to a limited category of merchant transactions above a specified threshold rather than becoming a blanket charge.
Getting this balance right will be critical.
An aggressive charging regime risks weakening one of the characteristics that made UPI ubiquitous: negligible friction for merchants and consumers. But an ecosystem processing tens of billions of transactions cannot indefinitely avoid the question of how banks, fintech companies and infrastructure providers will finance capacity expansion, cybersecurity, fraud prevention and innovation.
The challenge, therefore, is not choosing between free payments and commercial sustainability. It is designing an economic architecture that preserves universal, low-cost access while ensuring that the institutions maintaining the system have sufficient incentives and resources to invest.
The next frontier: AI, credit and resilience
Scale creates another challenge: resilience.
When a payments network becomes deeply embedded in everyday commerce, downtime ceases to be merely a technological inconvenience. Payment infrastructure increasingly becomes economic infrastructure.
Cybersecurity, fraud prevention, network redundancy, grievance redressal and capacity planning will therefore become as important to UPI’s second decade as customer acquisition was to its first.
Artificial intelligence could play a growing role. Asbe sees AI contributing to voice-led and intelligent payment experiences while also strengthening scalability, reliability and responses to cybersecurity risks.
Voice-based payments could be especially consequential in a multilingual country where digital literacy remains uneven. Combined with feature-phone solutions, delegated payments, credit lines on UPI and other innovations, the technology could push digital transactions deeper into segments that remain dependent on cash.
A decade that changed the economics of a payment
UPI’s first decade offers a broader lesson in digital governance.
Governments do not necessarily have to build every consumer-facing service themselves. Nor does digital transformation require handing foundational infrastructure entirely to a handful of private platforms. UPI demonstrates a third model: establish interoperable public rails, regulate them, and allow banks, fintech companies and technology firms to compete over the services built on top.
That model has produced something unusual.
The same basic payment infrastructure can connect a roadside vendor accepting ₹20 with a large retailer processing thousands of transactions; a rural consumer with a metropolitan professional; a public-sector bank with a fintech application; and increasingly, an Indian bank account with payment infrastructure overseas.
Ten years after its launch, UPI’s achievement is therefore larger than replacing some cash transactions with QR codes. It has altered expectations about what financial infrastructure should look like: instant, interoperable, ubiquitous and simple enough that the underlying technological complexity disappears from the user’s view.
But the tenth anniversary should not become an exercise in technological self-congratulation. The unresolved agenda is substantial: reaching the next hundreds of millions of users, reducing fraud, strengthening resilience, creating a sustainable economic model, expanding access to formal credit and making cross-border payments genuinely seamless.
As Asbe writes while assessing the decade, “Ten years completion is a strong beginning rather than a conclusion.”
The first decade of UPI was about making digital payments ordinary. The test of the second will be whether India can use the infrastructure beneath those payments to make formal finance—credit, savings, insurance, investment and inexpensive cross-border transactions—equally ordinary for every Indian.
