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Today, you can go out without your wallet or any cash in your pocket, because you have your phone. You can also make big transactions in less than 5 seconds, all because of UPI.
But when did our UPI landscape become so advanced? Let’s look at the evolution of UPI over the years and how it transformed digital payments in India.
Before the Unified Payments Interface, digital payments in India were limited to NEFT, RTGS and IMPS. These required bank details and had time restrictions.
E-wallets like Paytm and other applications like Google Pay had become popular but weren’t operative across platforms.
There was a growing need for a simple, real-time mobile-first payment system that could interoperate and promote digital inclusion across the country.
In April 2016, the National Payments Corporation of India, in collaboration with 21 banks, launched UPI built on Immediate Payment Service (IMPS) infrastructure.
While wallets only allowed payments after preloading funds, UPI enabled instant bank-to-bank transfers using just a mobile number or UPI ID (VPA).
UPI introduced Virtual Payment Addresses (VPA), a convenient alternative to account numbers and IFSC codes. VPA is a unique identifier used to send and receive money.
In 2016, demonetisation changed the digital payment ecosystem in India, making way for cashless payments. Amid a lack of enough cash, UPI transactions grew rapidly.
Many new UPI applications were developed over the years, from PhonePe to BHIM, offering many benefits and user-friendly interfaces to make UPI more popular.
In 2018, many new features were introduced in UPI, like linking overdraft accounts and one-time mandates (for IPOs and subscriptions). This expanded the use of UPI significantly.
Over time, more and more businesses, both small and large, started adopting UPI and using Quick Response (QR) codes for payments.
From just 92,000 UPI transactions in August 2016 to over 14 billion in 2025, UPI completely transformed India’s digital economy.
India has signed agreements with countries including Singapore, UAE and France to enable UPI there. This has given India a leadership role in fintech.
NPCI launched UPI123Pay in 2022 to allow those with smartphones to make UPI payments using missed calls and voice commands.
UPI has allowed for financial inclusion in a diverse country like India, where now, from street vendors to shopping malls, everyone uses the same payment interface.
With plans for UPI credit lines and the role of AI in fraud detection, UPI can evolve into a global financial network in the future.
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