💰 Economy & FinanceMAINS · GS3.1

UPI is now the world's largest real-time payment system

The Finance Ministry told Parliament that UPI carried 81% of India's retail digital payments in FY 2024-25, the year retail digital transactions crossed 22,000 crore.

What happened

In a Lok Sabha reply, Finance Minister Nirmala Sitharaman reported that the Unified Payments Interface (UPI) accounted for 81% of retail digital payment transactions in FY 2024-25 and has emerged as the world's largest real-time retail payment system.
The ministry credited the growth to the coordinated effort of the Government, the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI).
Retail digital payments rose from 7,176.90 crore transactions in FY 2021-22 (₹457.44 lakh crore) to 22,167.90 crore in FY 2024-25 (₹849.12 lakh crore) — a near tripling in volume in three years.
The reply also set out the State's fraud-control architecture and the reach-extension tools — UPI 123PAY, Hello UPI, the Payment Infrastructure Development Fund (PIDF) and the network of Centres for Financial Literacy.
This is a status statement, not a new scheme launch: it consolidates the official position on where India's digital-payments ecosystem stands at the close of FY25.

Background & context

UPI is not a single product but a real-time interbank payment system built and operated by the National Payments Corporation of India (NPCI). NPCI is a not-for-profit company under Section 8 of the Companies Act, set up in 2008 as the umbrella organisation for retail payments and settlement in India, promoted jointly by banks under the guidance of the RBI and the Indian Banks' Association. It is the same body that runs RuPay, IMPS, the National Automated Clearing House (NACH), the National Financial Switch (NFS), AePS (Aadhaar-enabled Payment System), BBPS (Bharat Bill Payment System) and FASTag's National Electronic Toll Collection. UPI, launched in 2016, sits on top of the older IMPS rails but adds a single mobile-first interface, a Virtual Payment Address (the "@" handle) so a user need not share bank details, and the ability for many apps to ride one set of rails.

The regulatory chain matters for Prelims. NPCI builds and operates the system; the RBI authorises and regulates it under the Payment and Settlement Systems Act, 2007; the Government supplies policy direction and, periodically, an incentive outlay to keep low-value UPI and RuPay debit-card transactions free for the end user. This tri-party design — Government, RBI, NPCI — is exactly the framing the Finance Ministry used, and it is the cleanest one-line answer to "who runs UPI". A common error is to call UPI an RBI product or a Government app; it is neither. UPI is the rail, and the consumer-facing apps that sit on it (BHIM among them, alongside private apps) are separate.

The drivers the ministry named — deep smartphone penetration, Aadhaar-enabled authentication and e-KYC, a financial-inclusion base built by the Jan Dhan accounts, and wide merchant acceptance — together describe the so-called JAM trinity (Jan Dhan–Aadhaar–Mobile) on which India's digital public infrastructure rests. UPI is the payments layer of that stack; Aadhaar is the identity layer; and the account base is the inclusion layer. Reading the three together is what turns a single statistic into a Mains-deployable argument about Digital Public Infrastructure (DPI).

For Prelims

What UPI is: the Unified Payments Interface, a real-time, 24×7, mobile-first interbank retail payment system that lets a user link multiple bank accounts to one app and transact via a Virtual Payment Address without sharing account numbers.
Operator: the National Payments Corporation of India (NPCI) — a Section 8 (not-for-profit) company, set up in 2008 as the umbrella body for retail payments, promoted by banks under RBI guidance.
Regulator: the RBI, under the Payment and Settlement Systems Act, 2007. Launched 2016. Built on the earlier IMPS rails.
The headline fact: UPI carried 81% of retail digital payment transactions in FY 2024-25 and is the world's largest real-time retail payment system.
The growth curve: retail digital payments — 7,176.90 cr (FY22) → 11,369.56 cr (FY23, +58.42%) → 16,416.02 cr (FY24, +44.39%) → 22,167.90 cr (FY25, +35.04%). Value reached ₹849.12 lakh crore in FY25.
UPI 123PAY: the feature-phone variant — works over IVR / missed-call / sound-based and app-based flows for users without a smartphone or internet.
Hello UPI: the voice-led, conversational interface that lets a user pay by speaking, in regional languages.
Payment Infrastructure Development Fund (PIDF): an RBI-operated fund (set up 2021) to subsidise the deployment of acceptance infrastructure — it has enabled ~5.80 crore digital touch points and ~56.86 crore QR codes.
Fraud control: device binding, two-factor authentication, NPCI's AI/ML fraud-monitoring; the National Cybercrime Reporting Portal with helpline 1930; and the Department of Telecommunications' Digital Intelligence Platform and the 'Chakshu' citizen reporting facility.
Financial literacy: 2,421 Centres for Financial Literacy operating as on 31 March 2025.

What it is NOT: UPI is not a wallet, and not a bank — it moves money directly between bank accounts in real time, so there is no stored "UPI balance" the way a prepaid wallet holds value. It is not an RBI app or a Government app; the RBI only regulates it and NPCI operates it. It is not the same as IMPS (UPI is the newer interface layered on IMPS), not the same as AePS (which authenticates by Aadhaar biometrics, not a UPI PIN), and not the same as RuPay (a card network, also run by NPCI). UPI 123PAY is distinct from *USSD-based *99# banking, the older feature-phone channel.

The full NPCI family (the "match the pairs" set): UPI (real-time mobile payments) · RuPay (domestic card network) · IMPS (instant interbank transfer) · NACH (bulk/recurring clearing) · NFS (ATM switching) · AePS (Aadhaar-biometric payments) · BBPS (bill payments) · NETC FASTag (toll). Knowing that all of these sit under one umbrella — NPCI — is what makes a "which of the following is operated by NPCI" question survivable.

Why it matters

The single statistic — 81% of retail digital payments on one rail — captures a concentration that is both India's strength and its exposure. On the strength side, UPI has done what costly card infrastructure could not: it pushed real-time, near-zero-cost payments down to the street vendor and the feature-phone user, and it did so as open, interoperable public infrastructure rather than a closed private network. The near-tripling of retail digital volumes in three years, against a value of ₹849 lakh crore, is the measurable face of financial inclusion turning into financial activity.

The problem the reply quietly addresses is twofold. First, the last mile — a smartphone-and-internet system leaves out the feature-phone user, the low-connectivity village and the non-literate user; UPI 123PAY (IVR and sound-based) and Hello UPI (voice) are the State's answer, and PIDF's QR-code and touch-point subsidy is the answer on the merchant side. Second, fraud and concentration risk — a payments system this large is a national target, which is why the ministry foregrounded AI/ML fraud monitoring, the 1930 helpline, and the DoT's Chakshu and Digital Intelligence Platform. The way-forward signalled is to keep widening reach while hardening the rails, so that scale does not become systemic fragility.

For Mains

Anchor

UPI as the payments layer of India's Digital Public Infrastructure — a case study in how open, interoperable, publicly-governed rails delivered financial inclusion at a scale and cost that closed card networks could not.

Substantiation

Hard data for any "digital economy / financial inclusion" answer: retail digital payments tripled from 7,176.90 cr (FY22) to 22,167.90 cr (FY25), ₹849.12 lakh crore; UPI = 81% of that; ~56.86 crore QR codes via PIDF.

Exemplification

A concrete Indian success story for "achievements in indigenous technology" and "leveraging the JAM trinity" — the world's largest real-time retail payment system, built on home-grown rails by NPCI.

Problematisation

The 81% concentration on one rail, and the smartphone/internet barrier for the last mile, are the gaps the release itself implies — usable as the "challenges" half of a balanced answer.

Way-forward

Extend reach to feature-phone and low-connectivity users (UPI 123PAY, Hello UPI), subsidise acceptance infrastructure (PIDF), and harden fraud defences (AI/ML monitoring, 1930, Chakshu) before scale becomes systemic risk.

Position

The Government's stated stance: digital-payment growth is the product of a coordinated Government–RBI–NPCI effort, with inclusion and fraud-control pursued together.

For UPSC: UPI — built and run by NPCI, regulated by the RBI under the Payment and Settlement Systems Act, 2007 — is the world's largest real-time retail payment system, carrying 81% of India's retail digital payments in FY25; UPI 123PAY, Hello UPI and PIDF are the tools extending it to feature-phone, voice and rural users.

Deploys into: India's growth and the digital economy (GS3.1) · inclusive growth and financial inclusion (GS3.2) · Digital Public Infrastructure and indigenisation of technology (GS3.13) · cyber-fraud and the security of payment networks (GS3.18).

Ministry of Finance · 2026-03-16 · PRID 2240723 · PIB source ↗

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