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Technology
Inside UPI: How India’s Instant Payment System Works
✍️ The Hindu
🗓 01 Sep 2026, 08:43 AM
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The Unified Payments Interface (UPI), launched in 2016, instantly transfers money between banks by linking user apps to a central system run by the National Payments Corporation of India. Its rapid growth has made it a global model for digital payments.
The Unified Payments Interface (UPI), introduced by the National Payments Corporation of India (NPCI) in 2016, allows users to transfer money instantly between bank accounts using a single mobile application.
To make a payment, a user links their bank account to a UPI ID and scans a QR code or enters the recipient’s UPI ID. The request is authenticated with an OTP, and the funds are moved through NPCI’s real‑time gross settlement system.
NPCI’s infrastructure provides a common application programming interface (API) that ensures interoperability across all participating banks, enabling seamless transactions without the need for bank‑specific apps.
Since its launch, UPI has processed over four billion transactions and has attracted interest from more than 30 countries looking to replicate its low‑cost, user‑friendly model.
To make a payment, a user links their bank account to a UPI ID and scans a QR code or enters the recipient’s UPI ID. The request is authenticated with an OTP, and the funds are moved through NPCI’s real‑time gross settlement system.
NPCI’s infrastructure provides a common application programming interface (API) that ensures interoperability across all participating banks, enabling seamless transactions without the need for bank‑specific apps.
Since its launch, UPI has processed over four billion transactions and has attracted interest from more than 30 countries looking to replicate its low‑cost, user‑friendly model.