UPI’s impact elevates India as a frontrunner in the global digital economy


17th Feb 2024: FXC Intelligence published a report assessing the impact of India’s Unified Payments Interface (UPI) on cross-border payments, following its most recent expansion into France, Sri Lanka and Mauritius earlier this month.

UPI is a real-time payments system that enables instant money transfers from one bank account to another. Though it was launched and is owned by the National Payments Corporation of India (NPCI), the platform itself is regulated by the Reserve Bank of India (RBI).

Whilst UPI was born out of a desire to unify payments in one central space as the Indian government cracks down on cash-based corruption, boosting financial inclusion across the country and contributing towards India’s vision of a digital economy, the FXC Intelligence report finds that the global impact of UPI on the cross-border industry has the potential to be significant.

Prior to the recent expansion into France, Sri Lanka and Mauritius, the instant payments system had already been adopted by merchants in Bhutan, the UAE, Malaysia, Singapore, Nepal, Oman, Qatar and Russia. There has also been news this week that India is in discussion with the US to establish a real-time payments link between the two countries.

A key strategy of the NCPI is to encourage Indians to pay for more goods abroad and enable easier cross-border payments for merchants. During the recent launch in France, India’s Prime Minister Narendra Modi said on X (formerly Twitter) that it marked “a significant step towards taking UPI global”.

They also recently partnered with Google Pay to help it expand the use of UPI for payments outside of India. This agreement will aim to make it easier for travellers abroad to access the system.

Looking to the future, the NPCI has stated its goal of establishing an international remittances network on the back of UPI to serve the large and growing Indian diaspora worldwide, one of the largest and most widespread in the world.

This market has the potential to be huge – FXC Intelligence’s market sizing data estimates that annual inbound remittances to India will rise by around 12% from 2023 to 2025, when remittances are projected to be over $115bn.

Daniel Webber, CEO and Founder of FXC Intelligence said:

“UPI underpins India’s dedication to its ongoing domestic digital transformation and its ambition to bridge gaps in financial access and boost participation in the domestic economy.”

“However, its impact extends far beyond India’s borders and is helping to position the country as a world economic leader and a pioneer in the digital payments space.

“The growing significance of UPI in cross-border transactions is not just a domestic technological success, but a strategic play to help cement India’s position as an innovative leader on the world economic stage.”

The report found that UPI grew by 900% in 2017 compared to the previous year and has since been rapidly adopted across India, with 117.6 billion transactions worth INR 182tn in 2023 alone.

Low transaction fees make it an attractive option for customers and merchants and the Indian government has promoted incentives for the use of UPI in the country and has plans to boost its investment in these incentives to INR 50bn in fiscal year 2023-2024.