46
Payments Regulation in Asia
APM Case Study: India – UPI and Other Wallet-Based APMs
Launched in 2016 by National Payment Corporation of India (NPCI), Unified Payments Interface (UPI) is an instant payment infrastructure which facilitates a variety of transaction types, including peer-to-peer and retail transactions. 113 Since launch, UPI has grown to become the most popular method of payment for consumers. For example, while card payments are reported to have accounted for 7.8 billion transactions in 2023 114 , UPI reported 12.3 billion transactions in just January 2024 (Figure 16). 115 In FY 2023, up to $1.7 trillion in transactions were performed with UPI. 116
10,000 12,000 14,000 16,000
0 100 200 300 400 500 600 700
0 2,000 4,000 6,000 8,000
No. of Banks live on UPI
Volume (in Mn)
Figure 16. Number of Banks Integrated with UPI and Monthly Volume of UPI 117
UPI is a system that essentially facilitates bank-to-bank transactions/transfers. On top of the UPI architecture, there are applications which are consumer facing. These apps can be built by banks or by third parties application providers (TPAPs). In any case, when the consumer uses these apps, they are making payments or transfers directly from their bank to the recipient’s bank. A wallet on the other hand operates more like a prepaid instrument. Consumers can use other payment instruments to load the wallet with value. Any wallet-based transaction is a wallet-to- wallet transaction. Prior to interoperability interventions covered below, consumers could only transfer funds within wallets. For example, a PhonePe wallet consumer could only transfer funds to another consumer with a PhonePe Wallet. What made these two systems more confusing is that one provider could offer both a UPI solution and a wallet solution.
113
https://www.npci.org.in/what-we-do/upi/product-overview
114
Euromonitor, Financial Cards and Payments in India (February 2024)
115
https://www.npci.org.in/what-we-do/upi/product-statistics
116 https://www.livemint.com/money/personal-finance/unified-payments-interface-why-made-in-india-upi-is-becoming-a- global-favourite-11698047714911.html 117 https://www.npci.org.in/what-we-do/upi/product-statistics
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