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The Reserve Bank of India (RBI) is looking to expand India’s flagship Unified Payments Interface (UPI) to more countries to make real-time inter-bank transactions using mobile phones available across the globe.
Introduced in 2016, UPI has emerged as the most preferred method of retail payments in the country, with a 79.6% share in total volumes of retail payments made in 2023-24, according to an RBI report.
“India would try to expand UPI use across the world so that any Indian with a UPI account, wherever he or she goes, should be able to make a payment using UPI,” T Rabi Sankar, Deputy Governor of RBI said at the Business Standard BFSI Insight Summit.
“There are discussions at this stage with various large and advanced economies. I am just hoping that those things pan out and become a reality,” Sankar informed.
So far, UPI has expanded to the United Arab Emirates (UAE), Peru, Mauritius, Sri Lanka, Singapore, France, Bhutan and Nepal.
“UPI as a payment instrument has caught the world’s attention in terms of the efficiency with which digital transactions happen and in terms of how it is catching on among our retail and business users,” Sankar pointed out.
The UPI has seen a tenfold increase in volume over the past four years, from 12.5 billion transactions in 2019-20 to 131 billion transactions in 2023-24, or 80% of all digital payment volumes. The UPI witnessed a milestone of 16.6 billion transactions in October alone.
“It (UPI) should be used by those sections of the population where it is currently not being used so that not only payments become better for these sections, but also our economy’s efficiency grows,” Sankar added.
NPCI International Payments Limited (NIPL), a wholly-owned subsidiary of the National Payments Corporation of India (NPCI), recently partnered with the Ministry of Digital Transformation (MDT) of Trinidad and Tobago to develop a real-time payments platform similar to India’s UPI. This collaboration makes Trinidad and Tobago the first Caribbean nation to adopt the UPI.
The partnership aims to empower Trinidad and Tobago to establish an efficient, real-time payment platform for both person-to-person (P2P) and person-to-merchant (P2M) transactions, expanding digital payments nationwide and fostering financial inclusion. The partnership also seeks to assist Trinidad and Tobago in modernizing its financial ecosystem, enhancing accessibility, affordability, and connectivity with domestic and international payment networks while ensuring interoperability.
Despite the substantial increase in UPI’s adoption, India is not witnessing a reduction of currency in circulation. However, according to Sankar, the rate of growth of notes in circulation is slower this year than in the earlier years.
“UPI is only a payment instrument while currency in circulation is about money—you hold money not just for making payments but for various other purposes, including as a store of value,” Sankar said.
Rising number of UPI frauds
The absolute number of retail frauds in UPI is increasing, as is the amount involved, and according to Sankar, this should be “dealt with very seriously.”
“In this digital age, things can happen very quickly, so you have to be very alert in terms of who you are sharing your passwords with, what digital hygiene measures everyone should adopt, which links you should click or not click, and all these measures. We have to increase awareness,” Sankar said.
At the same time, Sankar said discussions are ongoing regarding an artificial intelligence (AI)-driven database to help identify these frauds even before they can happen.
“If we can have a database large enough where past trends or incidences of these frauds can be studied, preferably by an AI system, which will be able to identify or rank the risk of fraudulent transactions… so it is possible to leverage digital technology, and the new emerging ones like AI, to be able to reduce all these things. And finally, we have to make sure that after these frauds happen, how quickly can we recover. So there are various ways of doing that, and many of those things are under discussion internally,” he added.
Data from RBI’s annual report show that digital payment fraud in India jumped to a record 14.57 billion rupees ($175 million) in the fiscal year that ended in March 2024 (FY2023-24). Card or internet-based frauds accounted for about 80% of total bank and financial institution frauds in FY2023-24, compared to about 49% in the previous year (FY2022-23). However, frauds reported in a year could have occurred several years prior to the year of reporting.
UPI begins awareness campaigns
To raise awareness of the safe use of digital payment services and prevent scams, the National Payments Corporation of India (NPCI), responsible for operating retail payments and settlement systems in India, has introduced a UPI safety awareness campaign.
The campaign seeks to empower citizens with the skills to counter common risks and threats from scammers. The campaign includes six short films highlighting common tactics used by scammers and fraudsters to deceive people. The films are produced in 11 Indian languages, making them accessible to India’s diverse population.
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