JUNE 2025
From UPI to the World – What’s Next?
India’s digital revolution is rewriting the global playbook for payments and public infrastructure. In less than a decade, a country once synonymous with cash has become the world’s digital payments powerhouse-thanks to a bold vision, layered public infrastructure, and relentless innovation. As UPI’s QR codes pop up in Singaporean malls, the question isn’t just how India got here, but what’s next for the world’s most ambitious digital ecosystem.
UPI: The Engine of India’s Digital Surge
Launched in 2016, the Unified Payments Interface (UPI) is now the backbone of India’s digital economy. Its genius lies in simplicity: one app, one virtual address, and instant, 24/7 payments. In March 2025 alone, UPI processed 19.78 billion transactions worth ₹24.77 trillion-a record, and a 30% jump in value year-on-year
But UPI isn’t just about numbers. It’s a story of inclusion: from urban professionals to rural shopkeepers, everyone can pay, receive, and thrive digitally. Product innovations like UPI Lite (for offline payments) and UPI 123Pay (for feature phones) have brought digital payments to India’s remotest corners1.UPI’s success has inspired a new wave of digital public infrastructure-Aadhaar, DigiLocker, BharatNet, and the Digital Rupee-enabling secure, instant communication and transactions for everyone, everywhere2
Digital Infrastructure: Bridging the Urban-Rural Divide
India’s digital backbone is expanding rapidly. By January 2025, over 2.14 lakh gram panchayats had been connected via BharatNet, with 6.92 lakh km of optical fiber laid3. The government’s 2025-26 budget prioritizes digital public infrastructure, AI, and data governance, aiming to reach even the most underserved communities4. This means more students in rural India can access AI-powered learning tools, and small businesses can leverage digital platforms for growth.
Going Global: UPI’s International Leap
India’s ambitions are now global. Under RBI’s Payments Vision 2025, UPI is set to expand to 20 countries by FY295. Already, Indian travellers can pay with UPI in Singapore, France, UAE, Mauritius, Sri Lanka, Bhutan, and the UK. Partnerships with platforms like Singapore’s PayNow and Greece’s Eurobank enable real-time cross-border payments and remittances6.
This global push isn’t just about convenience for tourists -it’s about setting global standards for interoperability, security, and financial inclusion. The “UPI One World” wallet, is a glimpse of India’s vision: a unified, borderless payment experience5.
The Digital Backbone: Aadhaar, BharatNet, and Data Infrastructure
UPI’s rise is built on a robust digital foundation. Aadhaar, the world’s largest biometric ID system, covers 138.34 crore people, enabling instant KYC and secure authentication8.. India’s internet connections soared from 25.1 crore in 2014 to nearly 97 crore in 2024-a 285% jump9. Digi Locker now serves over 37 crore users, digitizing everything from driving licenses to university degrees8.
What’s Next? The Future of India’s Digital Payments
India’s digital payments ecosystem is undergoing a silent fintech revolution, marked by rapid innovation, regulatory support, and a surge in consumer adoption. These disruptions- AI-powered security, AI-Powered Fraud Prevention, Biometric Authentication, Blockchain, Decentralized Finance and embedded payments-are fundamentally changing how Indians transact, access credit, and interact with financial services, driving the country toward a truly digital economy
1. Central Bank Digital Currency (CBDC): The Digital Rupee
India’s e-rupee, piloted since 2022, is gaining serious traction. The Reserve Bank of India’s CBDC is a government-backed, digital version of cash designed to modernize payments, reduce reliance on physical currency, and lower transaction costs10. Unlike traditional digital payments that move money between bank accounts, the e-rupee is a direct digital token issued by the RBI, offering final settlement instantly and securely5.
Key features and advances:
- Retail and Wholesale Use: Retail CBDC (e₹-R) is for everyday users and merchants, while wholesale CBDC (e₹-W) is for interbank settlements10.
- Offline Payments: The RBI has enabled offline CBDC transactions so users can pay even without internet access, crucial for rural and remote areas11.
- Interoperability: The digital rupee is being integrated with popular payment apps like Google Pay, PhonePe, and Amazon Pay, allowing users to choose between UPI or CBDC for seamless payments11.
2. Embedded and Invisible Payments: Seamless Transactions Redefined
India’s payment ecosystem is transitioning toward “invisible” transactions, where payments are seamlessly integrated into everyday devices and activities.
- UPI Lite & Offline Payments:
UPI Lite, designed for micropayments, allows transactions up to 1000 rupees without internet via an on-device wallet. UPI 123Pay enables feature phone users to transact via SMS or IVR, bridging the digital divide for 35 crore+ feature phone users12. - IoT-Driven Payments:
Smart devices like cars (automated toll payments) and refrigerators (auto-grocery orders) are becoming payment endpoints. The SoftPOS -The cardholder can then hold their credit or debit card or mobile wallet (Apple Pay, Google Pay, Samsung Pay) up against the back of your phone until the transaction is complete. If a PIN is required, the app will display a PIN pad for the customer. This enables NFC-based payments via smartphones, is projected to grow from USD 306.6 million (2024) to USD 2.52 billion by 2037 (17.6% CAGR). For instance, NCR Voyix and Worldline are deploying SoftPOS solutions globally, targeting SMEs in Asia and Latin America13.
3. AI, Biometrics, and Security: Fortifying Trust in Digital Payments
AI and biometrics are revolutionizing security and accessibility:
Fraud Detection & Prevention:
AI models for payments analyse more than 2000 data points in every transaction, adapting to everyday customer behaviour and taking care of anomalies when they occur in real-time. Data points include-
- Transaction amount, time, and location
- Device type, browser, and IP address
- Customer’s past spending patterns and merchant details
- Frequency, size, and timing of previous transactions
- Payment method, card type, and issuing bank
- Geographical patterns, currency, and even behavioural biometrics (like typing speed)
AI systems now analyze over 100 billion UPI transactions annually (2023-24), with real-time monitoring reducing fraud incidents by 40-50% through advanced pattern recognition and anomaly detection. NPCI is piloting Aadhaar-linked fingerprint/face recognition for UPI transactions, requiring users to biometrically authenticate high-value payments. Early trials show a 30% reduction in phishing scams and 25% fewer false declines, enhancing security while maintaining user convenience
· Cybersecurity Framework:
RBI mandates multi-factor authentication (MFA) and Security Operations Centres (SOCs) for real-time threat monitoring. Payment aggregators must report cyber incidents within 6 hours and conduct quarterly audits14.
· Biometric Adoption:
Over 1.3 billion Aadhaar-linked biometric records enable secure authentication. By 2025, 70% of UPI apps will integrate biometric options, targeting rural users with limited literacy15.
4. AI-Driven Personalization: Enhancing User Engagement
AI is transforming payment apps into intuitive financial assistants:
- Chatbots & Voice Assistants:
CRED’s AI chatbot handles 80% of customer queries, while Google Assistant, voice-activated payments are likely to rise in prominence. Users will be able to initiate transactions by simply speaking to their connected devices - Predictive Financial Insights:
Apps like Mool.AI use machine learning to offer investment advice, analysing real-time market data and user behaviour. EY India reports lot of Gen-Z users rely on AI for budgeting and savings16.
5. Cross-Border Trade and Remittances: UPI Goes Global
India is reshaping global payments with UPI’s international expansion:
- Global Acceptance:
UPI is live in 7 countries, including UAE, Singapore, and France, processing $100 billion+ in annual remittances. The UPI-PayNow linkage enables instant India-Singapore transfers, settling ₹1,000 crore daily1. - SMB-Focused Solutions:
Platforms like BRISKPE (backed by PayU) offer unified cross-border payments for Indian SMBs, combining A2A transfers, card collections, and PayPal integrations. - Regulatory Reforms:
RBI’s 2025 guidelines allow Indian exporters to open foreign currency accounts abroad, promoting Rupee settlements. Talks with Russia and GCC nations aim to bypass USD dependency17. The RBI has signed Memoranda of Understanding (MoUs) with central banks of countries like the UAE, Indonesia, and Maldives to promote cross-border trade in local currencies, including the INR
Conclusion
This unprecedented growth brings new challenges that cannot be overlooked. The sheer volume and speed of digital payments demand robust regulatory frameworks to ensure security, privacy, and financial stability18. Issues like sustainable pricing models for payment providers, balancing innovation with effective regulation, and keeping up with increasingly sophisticated fraud threats must be addressed with care. As new technologies like biometric authentication, and cross-border UPI integrations take center stage, it’s crucial that policy keeps pace-protecting consumers without stifling the creativity that has fueled India’s rise18.
Ultimately, India’s digital payments revolution is far from finished. The world is watching, learning, and even integrating India’s innovations into their own systems. By thoughtfully planning for challenges and embedding them into regulatory and policy considerations, India can ensure that its digital infrastructure remains not just a national success, but a global model for secure, inclusive, and future-ready finance.
Contributed by Adhwaith, India Fintech Foundation
