Everything You Need to Know about Unified Payments Interface (UPI)

Everything You Need to Know about Unified Payments Interface (UPI)
Unified Payments Interface

UPI or Unified Payments Interface is an instant real-time payment system created by the National Payments Corporation of India, which likewise implies that the Reserve Bank of India controls it. It helps to instantly transfer funds between two bank accounts with the help of a mobile app. The most common ones you might have come across in recent times are Paytm, PhonePe, MobiKwik, iMobile, BHIM app, among many others. Even the banks that boast of their own UPI app include Airtel Money, Axis Pay, Baroda MPay, Pockets-ICICI Bank, SBI Pay, Yes Pay, and so many others.

UPI reported 6.28 bn transactions in July 2022 that amounted to Rs 10.62 trillion, which is the highest-ever transaction volume since 2016!  

In the words of Indian economist Raghuram Rajan, UPI means the

"WhatsApp moment for banking"
What is UPI? | Unified Payments Interface Explained

If you're new to UPI or want to learn more about how it works, this blog is for you. In this post, we'll cover everything you need to know about UPI, including its features, services, advantges and disadvantages, and how to use it. We'll also discuss different types of UPI apps and how to use them. By the end of this blog, you'll have a clear understanding of UPI and how it can benefit you in your daily life.

UPI - Services
UPI - Charges
UPI - Industry and Growth
UPI - Milestones
UPI - UPI Apps
UPI - How to Use UPI Apps?
UPI - UPI App Transaction Limit
UPI - Upcoming Features
UPI - Advantages
UPI - Disadvantages
UPI - Challenges
UPI - Transaction Rules from January 2021
UPI - Benefits over NEFT, RTGS, and IMPS

UPI - Services

The UPI payments or Unified payments interface is a payment mechanism that allows instant money transfer without bank details. The UPI is developed by the NPCI and rather than a bank account number and IFSC code, the virtual payment address is utilized to pay through the UPI. UPI offers a wide range of services that make it a convenient and efficient payment system.

Here are some of the key services offered by UPI:

The most cost-effective way of money transfer

Fund transfer via NEFT entails a minimum charge of Rs 2.5 per transaction while the IMPS charges Rs 2.5 per transaction. On the other hand, UPI only charges 50 paise or less per transaction through the Unified payments interface. As such it has the potential to promote non-cash transactions of small amounts throughout India, which it is currently taking up seriously.

Cash-free functioning

UPI payments have made it a possibility for you to transfer a small amount to your vegetable vendor in a matter of seconds. Think Paytm or BHIM cards hanging on the local grocery store replacing the trouble you went through earlier to get a proper change. Think of the lesser time spent in the ATM lines. Going cash-free removes many hassles from your life and makes everything smoother in the age of digital India.


People have stuck with their cash payments because primarily they couldn't rely on online transactions and card payments as they ask for bank account details. However, the UPI method of payment cracks the deal here. The payment through the UPI does not require card details or the details of a bank account. You just need to enter your virtual payment address this way (think about the mobile number linked to your UPI app).

Real-Time Fund Transfer

Everything about the UPI app is an instant formula. Traditionally, adding new pay for the online fund transfer takes some time. This time varies from half an hour to 24 hours. In UPI, you can add a new payee instantly and transfer funds. Also, the process of fund transfer takes a few seconds with the help of a good data connection, which is very accessible for everyone now!

Cheaper alternative to POS machine

It is difficult to pay with the help of a banking card (debit or credit) everywhere you go. Most of the merchants don’t have a card swiping machine or sometimes the machines fail to catch signals. The machine in question is known as the POS terminal, which is a costly affair for the billing party involved. They have to pay the service charge for each transaction, which varies from 1.25% to 2.5% of the transaction value. This is why the UPI apps for merchants were introduced. You would have also faced the situation when the vendor asks for the service charge from you. It happens in a competitive market. Keeping the POS terminal is not very beneficial for small traders. However, UPI would help you do the same job without any cost incurred. As UPI operates through the smartphone, anyone can collect money without spending time and money on such machines. Also, the transaction cost is a mere 50 paisa, which is very low compared to the POS terminal.

One UPI app works for all the bank accounts

One might think that Axis Pay only supports Axis Bank accounts but the user gets to choose the UPI app they want to use and link all their Axis and Non-Axis bank accounts with them without any limitation. Be careful to choose the app that gives you maximum ease and options.

One-Stop Solution

The digital wallet has eased online payments. Opting for mobile recharges, buying rail tickets, shopping online and more have become very smooth because of the emergence of digital wallets. However, the number of such wallets is increasing by the day. Paytm, Freecharge, Flipkart, and IRCTC want you to keep the digital wallet. Naturally, it becomes a hassle to maintain more than one wallet. The UPI ends this problem as well. The payments through the UPI are as simple as payments through wallets, and only one app is enough to pay anywhere. Also, the UPI does not ask for money in advance. Rather, your money remains in the bank account and keeps earning interest. Digital wallets, on the other hand, don’t give us any interest as well.

Overall, UPI offers a range of services that make it a versatile and convenient payment system for users in India. Its user-friendly interface, quick transaction times, and advanced security features have made it a popular choice for digital payments.

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UPI - Charges

Unified Payments Interface is developed by the National Payments Corporation of India
Unified Payments Interface is developed by the National Payments Corporation of India

Currently, UPI is a free of charge payment platform. However, there has been no official statement from the authorities regarding a permanent waiver of transaction fees. The reason why UPI is free to use is its simple and cost-effective design. NPCI has been instrumental in democratizing mobile payments in India, making UPI a preferred mode of payment for even small transactions.

Despite the lack of transaction fees, NPCI has indicated that they would keep the cost of UPI very low. They have proposed a range of charges from 0 to 50 paisa per transaction. This range of charges is intended to keep UPI cost-effective and accessible for all users, including those who make small transactions frequently.

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UPI - Industry and Growth

The UPI system is hailed as one of the most successful real-time payment (RTP) systems in the world since it has been adopted in India. This innovative payment interface offers simplicity, safety, and security to P2P as well as P2M (person to merchant) transactions in India. According to 2021 reports, the UPI system of payments reinforced by the UPI bank apps helped in successfully materializing over 39 Bn financial transactions, which amounts to a business of around $940 Bn, which is again equivalent to around 31% of India’s GDP. The ease of use of the UPI apps and the interoperability between them are some of the prominent reasons driving the growth of the UPI industry. The total number of transactions in a month crossed an all-time high of the $100 billion mark in October 2021.

As per a recent report, UPI continues to be the primary platform for digital payments in India, as the total number of transactions surged by 70% in 2022, reaching a staggering count of 74 billion.

The growth of UPI has transformed the digital payments landscape in India, and its impact is being felt across various industries. With its user-friendly features, low transaction costs, and growing acceptance among consumers and merchants, UPI is poised to become the de facto standard for digital payments in India in the years to come.

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Unified Payments Interface (UPI) has been integrated with credit cards to provide users with a convenient and secure payment option. With this integration, users can link their credit card to their UPI ID and make payments using their credit card balance.

This integration has several benefits for users. Firstly, it eliminates the need to carry multiple payment instruments, as users can now use their credit card for UPI transactions. Secondly, it enables users to make digital payments even if they do not have sufficient funds in their bank account, as they can use their credit card balance for UPI transactions.

To link a credit card to UPI, users need to follow a few simple steps. They need to open their UPI-enabled mobile banking app, go to the add payment option, and select credit card as the payment instrument. They will then need to enter the details of their credit card, such as the card number, expiry date, and CVV. Once the details are verified, the credit card will be linked to the user's UPI ID.

Once the credit card is linked, users can make payments using their credit card balance by selecting the credit card option on the payment screen. The payment will be processed through the credit card network, and the user's credit card balance will be debited accordingly. Users can also view their credit card transactions and balance on the UPI app.

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UPI to Reduce Declined Payment and Payment Timeouts

Users of UPI have frequently reported issues related to payment timeouts and declined payments, which poses a significant challenge for UPI transactions. To address these issues, the National Payments Corporation of India (NPCI) has set its sights on reducing declined or timed-out payments through a new feature.

The NPCI aims to minimize these issues in real-time by enabling banks to take action within 30 seconds to unblock funds that may have been caught due to failed UPI transactions. Currently, this process can take up to 24 hours, causing inconvenience and frustration for users.

This move by NPCI is expected to significantly improve the user experience of UPI transactions and further strengthen the position of UPI as the preferred digital payments platform in India. By reducing the number of declined or timed-out payments, UPI will become even more reliable and convenient for users, boosting its adoption across the country.

Growth of UPI outside of India

The UPI, which has been strictly an Indian concept, prevalent across the nation will now be also adopted by Nepal. This has made Nepal the first country to adopt the Indian UPI system, as of February 2022. The deployment of the UPI system in Nepal would be overseen by NPCI International Payments Ltd. (NIPL), the international arm of NPCI with a partnership with Gateway Payments Service (GPS) and Manam Infotech. Here GPS serves as the authorized payment system operator in Nepal whereas Manam Infotech will further aid in the deployment of the services in Nepal.

The UPI transactions have been accepted by many other countries too, after Nepal. These mobile-based fast, real-time payments, are now already happening in the UAE, Singapore, and Bhutan. France will be the latest addition to this list of countries. According to the National Payments Corporation of India (NPCI) announcement on June 17, 2022, the UPI and RuPay cards will be accepted in France soon. The NPCI's international wing has already signed a memorandum of understanding (MoU) with the Lyra network of France for the acceptance of the UPI and RuPay across the country.

The Tata Group will soon be joining the league of the UPI apps, as per the news dated March 16, 2022. The multinational conglomerate is currently seeking clearance from the NPCI as per the reports. The Tata Group might also partner with ICICI Bank, as a private lender, via its digital commerce vertical Tata Digital, to power its UPI infrastructure. Tata Group has already applied to the NPCI to operate as TPAP (Third Party Application Providers) and is hoping it can go live soon.

According to the latest updates dated July 12, 2022, NPCI stated all of the UPI-based applications should first obtain the authorisation of the customers before they start recording their location and geographic coordinates. This system shall be followed without exception even for the customers who have already agreed to reveal their location originally while using the services, mentioned NPCI. In addition, the National Payments Corporation of India also mentioned that the UPI services of the apps shall continue even after the customers have revoked their consent for "sharing the location or geographical details for the app".  

Some major growth highlights of UPI are listed below:

  • The UPI transactions touched new heights when they crossed Rs 5 lakh crore mark in value in March 2021.
  • NPCI has mentioned that it will ban all gaming transactions via UPI on April 20, 2021.
  • Unified Payments Interface (UPI) crossed the 4 billion mark of transactions for the first time ever in October. These transactions concluded 2021 at a record high, where it recorded Rs 456 crore worth of transactions at Rs 8.26 lakh crore ($111.2 Bn).
  • The UPI payments recorded around 4.53 billion transactions, which is worth Rs 8.26 trillion in February 2022. It has almost doubled since the same time last year. Besides, the total value of UPI transactions was measured to be at Rs 41 trillion.
  • UPI recorded 6+ billion transactions in July 2022, which is the highest ever volume since it was founded in 2016. The 6.28 bn transactions that UPI platforms have seen amounted to Rs 10.62 trillion.
  • UPI boasts of a network of 330+ banks and an average ticket size of INR 1,730 per transaction. This makes UPI the most popular digital payment system in India.

The MoM Growth of UPI Transactions

The UPI transactions have been growing month on month. Though the UPI transactions declined slightly in June 2022, where there were Rs 586 crore transactions in contradiction with the Rs 595 crore transactions noticed in May 2022, the UPI payments have largely been quite unaffected by the RBI guidelines and the global economic scenario.

Among the duopoly that we always witness in the UPI ecosystem, of PhonePe and Google Pay, Whatsapp has risen to a record high in June 2022 with its UPI payment feature. Though WhatsApp Pay accounts for only 0.4% of the total UPI ecosystem of India, it has registered 2.3 crore transactions worth Rs 4,290.6 crore, thereby rising by 45% MoM in transaction volume and jumping 6.5X MoM in transaction count. The transaction count of Whatsapp Pay in May 2022, was only 34.8 lakhs, which were worth around Rs 294.98 crore.    

Here is a table showing the MoM growth of UPI transactions in India:

Year Total Number of Transactions MoM Growth
2016 0.32 million N/A
2017 915 million 2,746%
2018 17.9 billion 1,857%
2019 10.8 billion -40.3%
2020 22.3 billion 106%
2021 43.5 billion 95.2%
2022 74 billion 70%

Crypto Payments Stopped through UPI

Some of the platforms including Mobikwik, the wallet firm of India, and the international crypto exchange, Coinbase, have been using the UPI platforms for cryptocurrency transactions. However, as per the NPCI statement, it wasn't aware of any such happenings.

“We are not aware of any crypto exchange using UPI," said NPCI

in a statement on April 7, 2022, which indirectly meant a warning to all the platforms doing so and an urge to stop them from doing so.  

UPI - Milestones

UPI transactions concluded 2021 at a record high, where it recorded Rs 456 crore transactions at Rs 8.26 lakh crore ($111.2 Bn). The UPI transactions crossed the 6 bn mark in July 2022. PhonePe, GPay and Paytm are leading the UPI game in India with 96.47% of transactions being conducted via these UPI platforms.

PhonePe has been leading the UPI space since the beginning of the year. The Bengaluru-based digital payments app witnessed an 85.5% increase in its revenue from operations, which is recorded at Rs 690 crore in FY21 from Rs 372 crore in FY20. Google Pay is the next in line among the other UPI apps, as per the reports dated 15th October 2021.

A month after the launch of UPI123Pay, the UPI transactions surged by over 19% (19.6%), thereby becoming 540 cr transactions, when compared with February 2022's 452 cr transactions. Furthermore, the transaction value also witnessed a record rise of 16.17%, which was recorded at Rs 9.60 Tn in March from the previous month's Rs 8.26 Tn.

The real-time payment system, which was commonly referred to as the UPI, recorded 558 cr transactions, worth Rs 9.8 lakh crore in April 2022. The total transactions seen in March 2022 were 540 crores and valued at Rs 9.60 lakh crore. With total transactions for the month worth Rs 4.86 lakh crore, PhonePe stood as the UPI leader, followed by GPay, which materialised Rs 3.39 lakh crore worth of transactions. Paytm, Amazon Pay, and Whatsapp Pay, with Rs 101.65K crore, Rs 6699 crore, and Rs 242 crore, made up the league of 5 of the largest UPI apps that recorded the highest individual transaction values also in April 2022, along with being the most popular UPI apps of the month.

Fast forward to August 8, 2022 reports, PhonePe, Google Pay and Paytm command a whoping 96.47% of the UPI transactions done in the month of July 2022. Here, PhonePe led the other UPI platforms with 47.67% of transactions, followed by Google Pay's 33.9% and Paytm's 14.87% shares of the UPI market in transaction count.  

UPI Transaction Count in July 2022

Launch of UPI123Pay for the Feature Phone Users

As per the recent surveys, 74 crore mobile users have smartphones while the others out of 118 crore mobile users have feature phones, which are designed for voice calling and texting. This reveals that a significant portion of Indian mobile users uses feature phones. The UPI facility has certainly extended a whole new era of convenient bank account transactions merging multiple banks under one phone number so much so that the RBI thinks that the UPI should also be extended to feature phone users. This is the reason why the Reserve Bank of India governor Shaktikanta Das, has launched UPI for feature phone users, who can use the UPI facility without the need for the internet, which will help over 400 mn feature phone users use the homegrown payments network of India.  

UPI, which was easily available to date for smartphone owners and the users of smartphones, was available only via the complicated method of USSD for the others will now be easily accessible with the launch of UPI123Pay on March 8, 2022.

While with the earlier Unstructured Supplementary Service Data (USSD) mode, the feature phone users had to dial *99#, which brought a set of menus before and initiated transactions, the new method will be easier and more cost-effective than the USSD method, which involved numerous chargeable messages.

There are 4 different technologies that will be used in this newly christened method of UPI123Pay. These are:

  • IVR - The Interactive Voice Response or IVR numbers stand at the core of this process where the users can dial a number and start a secured call from their feature phones. After registering themselves, they can then start their financial transactions without the internet.
  • Apps - The users can also use apps on their feature phones where they can avail of a wide range of UPI functions, which will help them proceed with the kind of UPI transactions they like, excluding the scan and pay transaction, the work for which is currently in progress.
  • Proximity Sound-based - Another method that the feature phone users can use involves proximity sound-based technology. This technology relies on sound waves to enable networking. This eventually helps them perform contactless offline and proximity data communication on any device.
  • Missed calls - The final method that the feature phone users can avail of is the Indian missed call approach. In this method, the users will receive a callback from a standard number, which will let them authenticate and make their transactions smoothly.

Since the launch of UPI123Pay on March 8, 2022, more than 37K users have joined the new initiative and 21,833 successful transactions have happened via the same, as per the written reply received from the Minister of State for Finance, Bhagwat K Karad.

Real-Time Payment Dispute Resolution System

NPCI is planning to launch a real-time payment dispute resolution system for the UPI ecosystem. While announcing the upcoming rollout of the feature, NPCI MD and CEO Dilip Asbe mentioned that the all-new dispute resolution system would remove 80-90% of payment failures in real-time. This feature is all set to be rolled out in September 2022.


NPCI or the National Payments Commission of India launched DigiSaathi in India along with UPI123Pay, which is the phone's feature for real-time payments through UPI. DigiSaathi was brought in as a 24x7 helpline for the UPI123Pay, which will provide them with information on digital payments products and services. This DigiSaathi has been further made available by the NPCI for the users on Whatsapp. DigiSaathi, when it was launched in March 2021, was only available for the users via calling at 14431 and 1800-891-3333, but now they can simply text +91-892-891-3333 to access the same helpline.    

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UPI - UPI Apps

The UPI apps are the apps that are designed to follow the UPI mode transactions and are primarily designed to focus on the same. There are several UPI apps that have gained popularity in India due to their ease of use, security, and convenience.

Here are some of the most prominent UPI apps:

  • PhonePe - This UPI app is owned by Flipkart and has gained popularity due to its ease of use and seamless transactions. It also offers cashback and discounts on various transactions.
  • Google Pay - This app was formerly known as Google Tez and is one of the most popular UPI apps in India. It allows users to transfer money directly from their bank accounts and has several features such as bill payments, mobile recharges, and more.
  • BharatPe - BharatPe was founded in 2018 in India. The company offers a range of digital payment solutions for small and medium-sized businesses (SMBs) to accept payments from customers using UPI, debit/credit cards, and more.
  • BHIM - BHIM is a UPI app developed by the National Payments Corporation of India (NPCI). It allows users to transfer money between bank accounts and has features such as bill payments, balance inquiry, and more.
  • Amazon Pay - Amazon Pay is a digital wallet service offered by Amazon that allows users to make UPI payments, recharge their mobile phones, pay bills, and more. It also offers cashback and discounts on various transactions.
  • Whatsapp Pay - WhatsApp Pay was launched in India in 2020. The service allows WhatsApp users in India to send and receive money from their contacts directly within the app.

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UPI - How to Use UPI Apps?

If you haven't already started using a UPI app or a Unified Payments Portal (UPI), then it is not something really difficult.

So, if you are wondering about "how to pay using UPI?" then you need not worry!

Here first, you will be needing to register yourself and create a unique UPI ID/VPA. You can register for UPI before using the payments system with the help of any UPI-enabled bank mobile application or third-party application. After the registration is done, you can then start using UPI to send and receive payments. Here are some easy steps to guide you with the process:

Step 1: You need to install either the UPI app or your banking UPI app from Google Play Store or Apple App Store.

Step 2: Then, you need to choose your preferred language, verify your mobile number and eventually select your bank account.

Step 3: Now, you need to create your profile by typing in the basic details like your name, virtual ID, password, and more. This virtual ID that you will create here will stand as your payment address.

Step 4: Next, you will need to go to the option that says Add/Link/Manage Bank Account on the app, and proceed with linking your bank and account number with the virtual ID that you have created in the previous step.

Step 5: After that, you need to create your MPIN (Mobile Personal Identification Number), which is a security code that will be asked every single time you want to continue with a UPI transaction.

Step 6: You would now be successfully registered.

UPI - UPI App Transaction Limit

The NPCI has maintained that while there is no daily limit on the number of transactions, the maximum amount of fund transfer that is possible per day is 1 lac Rupees only. This means that you can pay multiple times to different payees every day, which makes going cash-free a reality. However, when it comes to the BHIM app money transfer limit, then the app allows you to send/receive Rs 40,000 per transaction and Rs 40,000 per day.

Some UPI apps like SBI Pay and WhatsApp Money only allow 20 transactions per day which are also enough for regular use in the everyday life of the users.

UPI - Upcoming Features

UPI Features
UPI Features | Authorized Transactions | Authentication

In the digital world, everyday people are solving new problems through online methods. UPI has identified the opportunities to relieve the users even further and will most likely come up with these improvements in their newer versions.

Pre-Authorized Transactions

Forgetting to pay your bills can be penalized at times and cause you unnecessary trouble. In the UPI, one can pre-authorize the app to draw money for the selected items directly from the bank account before the due dates. This system would also work for EMIs and other bill payments. One would have the ease to customize as per the needs and also put a monthly cap on the automatic payments.

Biometric Authentication

Just like your smartphone unlocks itself through your fingerprint, the UPI app is set to be ‘smarter’. This technology would work on phones which can capture fingerprints or high-quality iris images. The biometric authentication would end the need for MPIN during UPI money transfers.

Error Resolve

As of now, the UPI gives an error if the same mobile number is linked to multiple people’s bank accounts. Commonly, the same mobile number is registered to the account of the husband and wife. The UPI would resolve this problem in the next version of UPI.

UPI - Advantages

UPI (Unified Payments Interface) has several advantages that make it a popular mode of digital payments in India. Here are some of the key advantages of using UPI:

  • One of the major advantages of UPI is that it is fast, hassle-free, and the cheapest way of money transfer.
  • UPI is also very fast and a safe medium, while you only need a UPI ID for carrying out a transaction.
  • It is easy to use as it only requires a single click authentication that involves only two factors.
  • The user can easily link all their accounts to one ID on the UPI app.
  • You also have an option of scanning with a QR code to make online and offline purchases.
  • If the user owns a business, he/she can get payments from clients through this app’s option of collecting payments.
  • While making payments on UPI, the user does not have to pay any charges as it is free by the Government.
  • You also get exciting cashback offers.

UPI - Disadvantages

While UPI has several advantages, there are also a few potential disadvantages of UPI system. Here are some of the key drawbacks of UPI:

  • Sometimes, there can be delays in payments, it takes up to 48 hours for the money to get back to your bank account.
  • The UPI money transfer limit is currently Rs 100,000, which you can send to anyone through the mobile app.
  • The UPI pin only consists of four to six digits, which should be elongated for more security.
  • Another major disadvantage of UPI is that it is very slow in making payments sometimes, but that can be avoided by using faster internet services.
  • While UPI is gaining popularity in India, it may not be accessible to everyone. Users need to have a bank account and a smartphone with a compatible UPI app to use the service.

Overall, while UPI has several advantages, it is important to be aware of these potential disadvantages of UPI before using the system. By understanding the limitations of UPI, users can make informed decisions about when and how to use this payment system.

UPI - Challenges

The UPI apps and the sector, as a whole, have faced many challenges already overcoming which it is treading on the path of glory. One of the major challenges of the UPI industry was when the world witnessed one of the most dreadful diseases of modern times in the form of the coronavirus pandemic.

Due to the lockdown imposed to contain the spread of COVID-19, UPI has recorded transactions of less than one billion for the month of April after 12 months of constant growth. This is the first time in the past seven months that UPI volume went below the one billion mark. According to the National Payments Corporation of India (NPCI), UPI has registered 0.99 billion transactions amounting to Rs 1,51,140 crore(Rs 1.51 trillion).

Unified Payments Interface (UPI) is an instant payment system developed by the National Payments Corporation of India (NPCI), an RBI-regulated entity. UPI can be used through various apps like Google Pay and PhonePe to make direct payments from one bank account to another.

The lockdown imposed by the government due to COVID-19 has caused everything to shut down or be just semi-operational. The coronavirus outbreak has devasted many sectors of human life, let it be the financial sector, industrial sector, etc. resulting in an economic crisis.  Yet, India’s success with a unified payments interface (UPI) has continued to bring essential services to consumers amid the lockdown as well.

Though the government was able to transfer the relief money through UPI in the bank accounts of crores of Indians, UPI witnessed a 20.8% drop in volume and a 26.7% fall in value as compared to the month before. As corona effect, UPI had registered a little drop in payments volume in March resulting from 1.25 billion transactions worth Rs 2,06,462 crore or Rs 2.06 trillion.

Moreover, along with UPI, NPCI’s real-time payments service IMPS has also registered a sharp fall in volume as well as the value of transactions. In April, IMPS processed 122.47 million payments worth Rs 1,21,140.79 crore which is almost half of the previous month. In the previous month i.e. March, the figure was 216.82 million transactions worth Rs 2,01,961.70 crore.

The decline is shocking as in February 2020, the RBI governor, Shaktikanta Das, highlighted that digital payments accounted for almost 97% of the daily payment system transactions in terms of volume. He also mentioned that digital payments had accelerated by 50% in terms of volume in the last five years.

However, UPI body NPCI’s CEO Dilip Asbe said, “For the last five years, the number of transactions of UPI has been growing continuously month-on-month. But now there has been a slight drop in the volume due to the lockdown. The drop in volumes is due to near-zero restricted spends such as on e-commerce, travel, and similar online platforms. We expect volumes to pick up soon.”

Reasons behind the drop in transactions

It was anticipated that a nationwide lockdown to curb the spread of the Covid-19 pandemic would affect the digital payment volumes. However, financial experts were assured that digital payments will not get affected adversely but rather continue to grow as people would rely on digital transactions to avoid physical contact.

During the initial days of the lockdown, e-commerce, food tech, grocery as well as other online platforms were unable to operate. This led to a gradual fall in transactions but later the government allowed essential services to continue. Moreover, payments to PM-CARES via UPI have been the driving force behind UPI’s growth, which is still a 20.8% drop and these numbers are only in a few million.

Yet, transactions did not come back to normal as the government only allowed transactions on essentials. Hence, a majority of e-commerce services are still waiting for government orders. Soon, the government is likely to relax the norms for e-commerce platforms and allow them to deliver non-essential goods as well.

According to payment gateway Razorpay’s digital transaction report, for the month of April, the transactions in logistics have dropped by 96%, the travel sector has declined by 87%, food, and beverage by 68%, and groceries by 54%. In the last 30 days, transactions in cities like Ahmedabad, Mumbai, and Chennai took a hit of 43%, 32%, and 25% respectively. The report recorded transactions between when the lockdown was announced.

Razorpay’s report also stated that UPI emerged as the most popular digital payment method from March 24 to April 23,  with 43% of the total transactions during the period. It was followed by card payments with 39% and net banking with 10%. However, compared to the previous month, transactions through UPI declined by 37%, cards by 30%, and net banking by 28%.

Steps taken to deal with the drop

Though the situation worsened throughout the lockdown, NPCI seemed prepared to handle the lockdown. CEO Dilip Asbe said that NPCI can have multiple sessions and had a spare capacity to handle the demand. In order to ensure that everything keeps running smoothly, around 5% of the NPCI’s workforce travelled to the office.

NPCI has already devised a plan for the situation with due consideration of all the factors. Asbe said that NPCI has received complaints from some businesses about delays in cheque clearing. He added that there could be issues on the last mile. "While we are in touch with banks, there might be some issues with uploading because of the lockdown. These issues might be hard to resolve now as most of the workforce isn’t available now," said he. However, Asbe also mentioned that the main objective there was to keep employees safe. If they are safe, the operations can be managed. "There are things we cannot disclose, but there is enough backup in case something goes wrong," he added,

The government also used the UPI technology for facilitating the transfer of money in the bank accounts of beneficiaries within a day under the Pradhan Mantri Garib Kalyan Yojana (PMGKY). He further noted that besides this transfer of relief funds, the government has been using UPI for transferring monetary perks in various schemes such as Ujwala and MNREGA.

After the success of the implementation of UPI in these schemes, many state governments then relied on UPI technology to transfer funds under various schemes. Madhya Pradesh government recently transferred some relief money to the accounts of lakhs of construction workers. PM Narendra Modi had also urged people to go for digital payment to ensure safety from the infection.

Major Challenge for the Stakeholders

India’s free payments system, UPI is not actually free for all. It is simply free for the users and merchants but the stakeholders have to pay a price for it. As per RBI, the costs incurred by the stakeholders in a peer-to-merchant (P2M) UPI transaction with an average order value of ₹800 is nearly ₹2 i.e, 0.25% of the transaction value.
So, for example, if 16 lakh crore INR worth of transactions have occurred in the previous year on the UPI that means it costs roughly 4,000 crore INR ($500 million) to banks, NPCI, and the payment service provider.

UPI - Transaction Rules from January 2021

The Reserve Bank of India (RBI) has come up with the ''positive pay system'' for cheque payments. This system is introduced in order to keep a check on banking fraud. According to the positive pay system, the user is required to re-confirm their key details for payments that go beyond 50,000. The user, however, has a choice to use this system.

Another positive rule for the UPI is that the limits for contactless card transactions and UPI will be enhanced from Rs 2,000 to Rs 5,000 from January 2021. This is done to help expand the use of digital payment in a safe and secure manner, especially during a pandemic.

UPI - Benefits over NEFT, RTGS, and IMPS

UPI offers several benefits over other payment systems such as NEFT, RTGS, and IMPS. Here are some of the key advantages of UPI:


Both the platforms are known to have pros and cons. UPI facilitates instant transfer for free, whereas it can only transfer Rs 1 Lakh per day. NEFT on the other hand allows the user to transfer funds from any bank branch to any individual having an account with any other bank branch in India. A disadvantage of NEFT is that the cost is higher than UPI and it takes about 12 hours for one NEFT transfer.


UPI transactions are fast, simple to use, and free of charge, and are ideal for future payments, loan repayment, or credit card payments. Whereas the Real Time Gross Settlement (RTGS), is said to be of high value and needs to be processed in real-time, and is ideal for the transfer of Rs 2 lakhs and above.


The Immediate Payments Service (IMPS), is an instant interbank electronic fund transfer service that helps the user to access your bank account and transfer funds immediately and securely. However, with UPI the user can pay directly from a bank account to different merchants, both online and offline, without the hassle of typing your credit card details, IFSC code, or wallet passcodes.


UPI is a game-changing payment system that has made digital payments accessible and affordable for millions of people in India. Its ease of use, low cost, and instant transfer capabilities have made it the preferred payment option for individuals and businesses alike, and it is set to revolutionize the way people make payments in India for years to come.

With all the knowledge of UPIs, it is safe to say that people are encouraged to take a step toward going cash-free. Many other improvements are expected in the newer updates so it would not hurt to make the shift and keep up with the new digital times of managing funds.


What is the use of UPI?

UPI or Unified Payments Interface is an instant real-time payment system created by National Payments Corporation India, which likewise implies that the Reserve Bank of India controls it.

What are the services of UPI?

The services of UPI are Cash-free functioning, Security, Real-Time Fund Transfer, a Cheaper Alternative to POS machines, and One UPI app that works for all bank accounts.

What is the Unified Payment Interface meaning?

Unified Payment Interface refers to a system that empowers the users with multiple bank accounts under a single mobile application for effective transactions. It is an all-in-one interface for payments, hence "unified".    

What are the charges for UPI?

UPI is free of charge at present. However, at the meeting of banks with NPCI on February 14, 2020, it has been decided that UPI transactions are free for up to 20 transactions per person.

What is the current UPI transfer limit?

Currently, the UPI transfer limit is set to Rs 1 lakh, as decided by the NPCI.

Can the UPI app for the current account be used?

The UPI app for current accounts can easily be used both by merchants and consumers and they work just as well as the UPI for savings accounts.

What are UPI transaction charges?

At present, the UPI transfer limit per UPI transaction is ₹1 Lakh.

Is UPI safe?

Yes, UPI is safe and secure as it has a number of measures that ensure its safety.

Is a debit card necessary for UPI?

Yes, the debit card is mandatory to set the UPI pin.

How to use UPI to transfer money?

UPI can easily be used to transfer money, in which a user needs to have his/her bank account connected along with a working UPI ID and a phone number that is linked with the bank account.

What are some UPI transaction apps?

Some of the best UPI transaction apps are:

Can I use UPI to transfer money internationally?

No, UPI is a domestic payment system and can only be used to transfer money within India.

Which banks support UPI?

Most major banks in India support UPI, including State Bank of India, HDFC Bank, ICICI Bank, Axis Bank, and others.

How does UPI work?

UPI allows users to link their bank accounts to a mobile app and make payments directly from their account. Users can transfer money to other bank accounts by using the recipient's UPI ID or mobile number.

What should I do if my UPI transaction fails?

If your UPI transaction fails, you can try again after a few minutes. If the problem persists, you can contact your bank's customer service for assistance.

Yes, you can link multiple bank accounts to UPI. You can switch between accounts while making payments or choose a default account for transactions.

Is there any disadvantages of UPI?

Yes, there are some disadvantages of UPI. It requires a stable internet connection and a smartphone to make transactions, and it may not be widely accepted in all merchants and stores.

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