The National Payments Corporation of India (NPCI) was set up by Indian banking institutions under Reserve Bank of India (RBI) guidance to operate and standardize retail payment systems. This created a single organization capable of building interoperable “rails” (shared infrastructure) used by many banks and apps.
NPCI introduced the Unified Payments Interface (UPI) as a real-time system for moving money directly between bank accounts using a mobile phone. UPI was designed to be interoperable, so different banks and apps could connect to the same network and transact 24/7.
As banks and fintechs built their own UPI-enabled apps, UPI started reaching users through more familiar consumer products. For example, PhonePe highlighted that it offered UPI-based user services in August 2016, showing how third-party apps could help drive adoption beyond bank-branded apps.
The Government of India announced demonetisation of ₹500 and ₹1,000 notes, creating cash shortages and pushing many households and merchants to try non-cash payment methods. This policy shock increased attention on fast, low-cost digital payment options, including bank-to-bank systems like UPI.
NPCI launched BHIM (Bharat Interface for Money), a UPI-based app intended to make UPI easier for the public and to encourage person-to-person transfers and merchant payments. BHIM provided a reference app that helped demonstrate UPI’s basic workflow (UPI ID, QR code, and UPI PIN) across banks.
Google introduced Tez, a UPI-based payments app built for the Indian market, adding another large distribution channel for UPI. This was important because it increased competition on user experience (onboarding, reliability, and rewards) while still relying on the same interoperable UPI rails.
NPCI launched UPI 2.0, adding features that made UPI more usable for broader scenarios, not just simple transfers. Key additions included linking overdraft accounts, pre-authorizing payments via mandates (permissions to pay), and storing invoices, which supported more structured merchant and bill-payment flows.
By December 2018, UPI’s monthly transaction value crossed ₹1 trillion, signaling that the system was moving from early adoption to mass usage. This milestone suggested UPI was increasingly trusted for everyday payments at national scale, including merchant transactions.
In October 2019, UPI transactions passed 1 billion for the first time, showing that UPI was becoming a primary retail payment channel. NPCI linked this growth to support from banks, third-party apps, and government and RBI digital-payment initiatives.
NPCI introduced UPI AutoPay to enable recurring payments through UPI mandates (for example, subscriptions and utility bills). This mattered because it extended UPI from one-time payments into scheduled payments, a key capability for scaling digital payments in households and small businesses.
In October 2020, UPI processed more than 2 billion transactions in a single month, roughly doubling the prior year’s monthly scale. This showed UPI could handle very high volumes and keep growing even amid pandemic-era disruptions.
NPCI granted approval for WhatsApp Pay to go live on UPI for up to 20 million users in India. Bringing UPI into a major messaging app expanded where payments could happen, but the initial cap showed regulators were also managing risk and compliance as UPI scaled.
By July 2021, UPI processed about 3.24 billion transactions in a month, reflecting rapid scaling in both usage and merchant acceptance. This milestone marked UPI’s transition from a widely used system to a core piece of national retail payment infrastructure.
India's Unified Payments Interface (UPI) introduction and scaling (2016–2021)