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As UPI goes global, what can India’s instant payments success teach the world?

Experts from Pismo and Drona Pay analyse the booming instant payments sector in India and its prospects


Written by Drona Pay and Pismo



Few nations can match Indian when it comes to digital payment adoption. Volumes have risen by an annual rate of 50% over the past five years and India’s unique real-time system – Unified Payments Interface (UPI) – has seen explosive growth.


UPI person-to-person transactions accounted for 49% of all digital transactions in Q2 2022, with debit cards at 5% and credit cards at 3%. UPI clocked in over 17.4 billion transactions in volume and US$370 billion in the same period.


Launched in 2016, UPI has played a significant role in the democratization of payments in India. It has made digital payments faster and more convenient for consumers and businesses by enabling them to transfer funds instantly 24x7, even on holidays, without needing additional information or bank account details.


Cross-industry collaboration

The story of UPI is made more interesting by the enthusiastic takeup by both banks and non-bank institutions. The number of participating banks jumped by 44% in 2022. Yet the more significant impact has been made by digital wallets.


“Paytm, PhonePe, and Google Pay have been instrumental in driving the adoption of digital payments in India, particularly in non-metro cities and rural areas where access to traditional banking services is limited,” says Varun Dudeja, Head of Business Development for Asia at Drona Pay partner, Pismo.


“Banks have also played a significant role in the proliferation of digital payments in India. They have developed digital payment systems and platforms, which have made digital payments more accessible to their customers.”


Drona Pay CEO and Co-Founder, Satish Kashyap, adds: “The key benefit of the UPI architecture is the ability of banks and non-banks/fintechs to play a role in taking UPI to end customers. While the initial journey was made with banks, third-party apps (like wallets) helped the penetration of UPI.”


Kashyap outlines a series of key strategies employed by digital wallets to power adoption:


  • Ease of Use: Digital wallets offer a simple and user-friendly interface that enables consumers to make payments with just a few taps on their smartphones.

  • Customer-centric: Digital wallets have used partnerships, cashback, rewards and other exciting ways to drive adoption.

  • Innovation: Digital wallet companies have been at the forefront of developing new features, partnerships, integrations and functionalities that make digital payments more attractive to consumers.

  • Partnerships: Digital wallet companies have partnered with merchants, e-commerce companies, and other service providers to make digital payments more ubiquitous and convenient.



Going global

India has the world’s largest diaspora, with over 30 million Indians living outside their home country. Non-resident Indians (NRIs) and overseas citizens (OCIs) help to make India the largest recipient of remittances. Here too, UPI and instant payments are making waves.


Whether sending money home, or Indians shopping abroad, UPI compatibility has expanded to the UK, US, and China. “As UPI goes international, Indian banks must consider several technical aspects to ensure a seamless and secure cross-border payment experience,” says Pismo’s Dudeja.


Among these considerations are:

  • Compliance with international regulations: firms should be aware of each country's different compliance requirements and ensure they have the necessary licenses and approvals.

  • Interoperability: Indian banks should establish partnerships and collaborations with banks and payment systems in different countries to ensure interactivity.

  • Robust security measures: Cross-border payments are more vulnerable to fraud and cyber-attacks, and Indian banks need to ensure that they have robust security measures.

  • Infrastructure and scalability: A robust and scalable infrastructure is needed to handle high volumes of cross-border transactions in multiple currencies

  • User experience: Firms should develop a user-friendly interface that enables customers to initiate and track their cross-border payments easily.

  • Customer support: Banks should deploy a robust and multi-language customer support system to assist customers with any issues related to UPI international remittance.


Lessons to be learned

India's impressive uptake in the digital sphere offers several valuable lessons for other regions of the world.


“India's digital payments ecosystem was built through collaboration between banks and non-bank players such as digital wallets and payment providers,” says Drona Pay CEO Kashyap. “This partnership model has been crucial to innovation, as fintechs/non-banks have played a much more significant role in driving adoption than banks.


Dudeja adds: “India's digital payment systems have been designed to be inclusive and accessible to a broad range of users, including those without bank accounts or smartphones. This approach has helped drive the adoption of digital payments in the country, and other regions can learn from this and focus on designing digital payment systems that are inclusive and accessible to all.”


The Indian government has played a significant role in driving the adoption of digital payments, says the Pismo Head of Business Development. It has promoted digital payment solutions and incentivised consumers and merchants to use them. “Other regions can learn from this and encourage their governments to support developing and adopting digital payment solutions.”


Finally, education has proved to be essential in powering the adoption of instant payments. “Other regions can learn from this and invest in educating and creating awareness among their citizens about the benefits and safety of digital payment systems,” concludes Dudeja.


Want to learn more about the potential of real-time payments adoption or how UPI could drive success at your business? Visit our partner, Pismo, to find out!


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