In a nation where digital payments have transformed from novelty to necessity, India stands at the threshold of its next financial revolution. There are many exciting changes happening in India’s payment system. From new ways to pay using voice commands to digital money like the Digital Rupee, and easier international payments. In this blog, we will explore some of these important developments. There are many more things to discover, and no matter how much we learn, there will always be new ideas and innovations to explore.
While payment 1.0 was the era of cash and cards,
2.0 marked the shift to electronic and mobile payments and
3.0 became the next frontier with features like voice integrated payments, CBDC readiness, cross border payments and AI integration.
While UPI has undeniably redefined how Indians transact-processing a staggering 93.23 billion transactions worth INR 130.19 trillion in the second half of 2024 alone-the question on everyone’s mind is: what comes next?
Let’s explore the frontier technologies poised to shape India’s payments landscape beyond UPI.
· “1.2 billion bank accounts with 900 million mobile phone accounts and 1 billion Aadhaar numbers” were linked in 2016. In 2017, the state also implemented a new Goods and Services Tax (GST) legislation that harmonized tax regimes across the country and enforced the monthly filing of financial data for businesses. This plumbing of data and identification systems knitted the “information dragnet” (Fourcade and Healy, 2017) that FinTech firms can plug into for identification purposes, especially in the sectors of payments, financing or neobanks.
· Second, the National Payments Corporation of India (NPCI), an institution supervised by the Reserve Bank of India (RBI), created two key infrastructures: RuPay, a card payment system launched in 2012 to facilitate electronic transactions, and most importantly, the Unified Payments Interface (UPI), a powerful “mobile-based platform for transferring funds between banks that is open to all service providers” (Jain and Gabor, 2020, p. 10). . FinTech firms use the UPI to process payments free of cost, bypassing the incumbent players such as Visa or Mastercard, creating a potential to deeply re-intermediate financial services industry
Source: https://www.sciencedirect.com/science/article/pii/S0016718523000465#s0020
1. Voice Commands: The New Payment Interface
Imagine paying your bills with just a conversation. This future is rapidly materializing as AI-powered voice payment systems begin to take center stage in India’s fintech evolution.
Google Pay has announced plans to introduce voice-enabled UPI payments, allowing users to complete transactions through simple voice commands in their preferred languages. Developed in partnership with the Indian government’s Bhashini AI project, this technology aims to dismantle accessibility barriers, particularly for those who find traditional digital interfaces challenging3.
The statistics paint a compelling picture of opportunity: cashless transactions in India surged by an impressive 80% in 2025, with projections suggesting nearly triple this volume by 2030 10. However, the digital divide remains substantial-particularly in rural areas where literacy levels and technology adoption vary significantly. Voice-based payment systems offer an elegant solution, potentially bringing millions more Indians into the formal financial ecosystem.. It will be available through two modes — on-call (through a voice call) and in-app (through any UPI app). The voice-based payments market in India, valued at USD 289.8 million in 2023, is expected to reach USD 772.7 million by 2030, growing at a robust 15% CAGR
2. Digital Rupee: Building CBDC Readiness
As central banks worldwide explore digital currencies, India is methodically laying the groundwork for its own CBDC implementation-the Digital Rupee.
The Reserve Bank of India’s expansion of the Central Bank Digital Currency offers a secure, government-backed digital alternative to fiat currency, reducing dependency on intermediaries and lowering transaction costs2. Pilot programs for the Digital Rupee are gaining traction, promising a seamless blend of digital and traditional banking systems.
The success of this initiative hinges on robust digital infrastructure, particularly in rural regions where only approximately 25% of the population is digitally literate4. Government programs like BharatNet are accelerating broadband connectivity deployment, though significant work remains to achieve nationwide coverage.
The RBI recognizes that effective CBDC implementation requires a delicate balance: the Digital Rupee must complement rather than disrupt existing payment systems4. This integration approach ensures that digital currency adoption can proceed smoothly alongside established frameworks like UPI, which has experienced phenomenal growth
CBDC Readiness: Is India Prepared for the Digital Rupee Era?
India’s journey toward a Central Bank Digital Currency (CBDC), known as the Digital Rupee (e₹), is a story of ambition, careful planning, and technological innovation. As of 2025, both wholesale and retail versions of the Digital Rupee are in advanced pilot phases, with the Reserve Bank of India (RBI) leading the charge73.
Infrastructure and Adoption
The RBI officially launched its CBDC pilots in late 2022, targeting both the wholesale (e₹-W) and retail (e₹-R) segments37. The wholesale CBDC is used to settle secondary market transactions in government securities, while the retail CBDC is designed for everyday transactions-much like cash, but digital8. A key pillar of India’s CBDC readiness is its seamless integration with the existing digital payments infrastructure-notably UPI and QR code-based payments38. The RBI has allowed payment companies like Google Pay, PhonePe, and Amazon Pay to offer digital rupee transactions through their platforms, making CBDC usage as simple as scanning a QR code3.
1. Pilot Scale: By December 2023, the RBI achieved its goal of one million daily retail CBDC transactions3. As of June 2024, daily transactions stabilized at around 100,000, reflecting system stress testing and gradual scaling3.
2. Participation: Major banks-including SBI, HDFC, ICICI, and Yes Bank-have been onboarded, with fintechs like CRED becoming the first non-bank participants in 20254.
3. Geographic Reach: The pilot covers major cities and is expanding to more locations, with over 50,000 users and 5,000 merchants participating as of early 20233.
4. Interoperability: CBDC is being designed to be interoperable with UPI and other payment systems, so users can switch between payment modes effortlessly9.
5. No Interest, No Fees: The Digital Rupee does not accrue interest and is free from transaction processing fees, making it a true cash alternative7.
Cybersecurity and Data Protection
Security is paramount for CBDC adoption. The RBI is implementing advanced encryption and AI-based monitoring systems, working with CERT-In to ensure real-time threat detection and response9. These measures are designed to protect user data and maintain trust in the digital currency ecosystem.
3. Global Ambitions: Cross-Border Payment Evolution
India’s payments vision extends well beyond its borders, with strategic initiatives to internationalize both the Rupee and UPI.
January 2025 marked a significant regulatory milestone as the RBI liberalized forex regulations, enabling Indian exporters to establish foreign currency accounts overseas. This reform, coupled with authorizing bank branches abroad to facilitate Rupee transactions for non-residents, creates a foundation for greater Rupee-based trade settlements globally5.India has significantly expanded its cross-border payment capabilities, with countries like the UAE, Singapore, Bhutan, Nepal, Maldives, Mauritius, France, and Sri Lanka
NPCI’s international partnerships demonstrate UPI’s expanding global footprint. Agreements with Peru and Namibia aim to establish UPI-modelled systems by 2026-2027, while the successful integration with Singapore’s PayNow has already enabled seamless cross-border transactions. This interconnection sets a precedent for future linkages with payment networks worldwide5.
The Road Ahead
As UPI continues to dominate-facilitating over 15,547 crore transactions worth ₹223 lakh crore from January to November 2024 alone9-these emerging technologies represent the next frontier.
– Voice payments will likely drive inclusion,
– CBDCs will establish new forms of digital money, and
– cross-border capabilities will position India as a global payments innovator.
The evolution from cash to digital wallets took years; the shift to voice commands, digital currencies, and borderless payments may happen much faster. India’s payment ecosystem stands ready for this next transformation-Payments 3.0-where technology not only facilitates transactions but fundamentally reimagines what it means to pay.
While the rate of growth in India’s payment ecosystem is truly unprecedented, it brings with it a new set of challenges that cannot be ignored.
As we move into Payments 3.0 which has new technology like voice-enabled transactions, digital currencies, and seamless cross-border payments-the complexity of technology, security issues grow as well. It is essential that this innovation is matched by new laws and regulation. Issues like data privacy, cybersecurity, digital literacy, and equitable access must be addressed to ensure that the benefits of Payments 3.0 reach every Indian safely and fairly. By anticipating these challenges and embedding them into regulatory and policy frameworks, India can not only create great impact but also set a global benchmark for a resilient, inclusive, and future-ready digital payments ecosystem.
Contributed by Adhwaith, India Fintech Foundation
