India’s widely used Unified Payments Interface (UPI) is undergoing a significant technical enhancement starting June 16, bringing with it faster transaction processing and quicker payment reversals for users across the country.
The National Payments Corporation of India (NPCI) has introduced a set of backend improvements designed to enhance UPI’s speed by up to 66%, while also strengthening system efficiency and reliability. These upgrades aim to reduce payment failures and lag, ensuring smoother experiences for users across all UPI-enabled platforms, including Google Pay, PhonePe, Paytm UPI, BHIM, WhatsApp UPI, and others.
India is witnessing a massive surge in UPI transaction volumes, with millions of payments being processed every day. In response, NPCI is upgrading the system infrastructure to ensure it keeps up with demand and maintains high performance standards.
“The focus of these changes is solely on reducing delays and bolstering reliability for all stakeholders involved, including individual users to major payment platforms and banks.”
The latest upgrade also significantly improves the performance of UPI’s Application Programming Interfaces (APIs)—the core components that handle functions such as payment execution, validation, and status checks.
According to NPCI’s earlier circular:
“The Request Pay/ Response Pay time has been cut down to 15 seconds from 30 seconds”
“The Transaction Reversal time is now down to 10 seconds”
“‘Check transaction status’ and address validation also take 10 seconds”
These improvements are anticipated to offer significant advantages to all stakeholders in the UPI ecosystem, including remitter banks, beneficiary banks, and Payment Service Providers (PSPs) such as Google Pay, PhonePe, and Paytm.
This move signals another step in India's effort to modernize its digital payment infrastructure, especially at a time when UPI is expanding into global markets and offline payments. With improved speed, reduced transaction failure rates, and enhanced system stability, the user experience is expected to improve significantly for both individual users and merchants.
The National Payments Corporation of India (NPCI) is a cornerstone of India's digital payment revolution. It's the "umbrella organization" that operates retail payments and settlement systems in the country, and its impact on making India a digitally empowered economy is immense.
NPCI was incorporated in 2008 as a "Not for Profit" Company under Section 25 of the Companies Act 1956 (now Section 8 of the Companies Act 2013). It was an initiative of the Reserve Bank of India (RBI) and the Indian Banks' Association (IBA).
The primary objective behind its creation was to consolidate and integrate various retail payment systems in India into a robust, secure, and efficient nationwide infrastructure. Before NPCI, India's payment landscape was fragmented, characterized by an overworked network of clearinghouses and deferred transaction settlements.
NPCI aimed to standardize and streamline these systems, making them accessible, reliable, and cost-effective for both consumers and financial institutions, ultimately promoting financial inclusion.
Since its inception, NPCI has consistently rolled out innovative products and services, transforming the way payments are made in India. Its journey has been marked by significant milestones, establishing India as a global leader in real-time retail payments.
NPCI has developed a wide array of payment solutions that have become integral to the daily financial lives of millions of Indians:
Unified Payments Interface (UPI): Launched in 2016, UPI is arguably NPCI's most groundbreaking achievement. It's a real-time payment system that allows users to send and receive money directly from their bank accounts using a mobile phone, facilitating peer-to-peer (P2P) and person-to-merchant (P2M) transactions. UPI has revolutionized digital payments with its simplicity, speed, and interoperability.
UPI Lite: Designed to streamline micropayments, UPI Lite enables low-value transactions via an on-device wallet, reducing reliance on real-time bank connectivity for small amounts.
UPI 123Pay: Launched to empower feature phone users, enabling them to make digital payments without an internet connection.
UPI Circle: A newer feature (launched at Global Fintech Festival 2024), enabling UPI users to delegate payments to trusted secondary users with defined spend limits, improving budget management and convenience.
UPI ATMs: Allowing cardless cash withdrawals and deposits by scanning a QR code with a mobile banking app, enhancing security and accessibility.
RuPay: India's indigenous card payment scheme, launched to fulfill RBI's vision of having a domestic, open-loop, multilateral system. RuPay cards are issued by banks in India and are accepted at ATMs, PoS terminals, and e-commerce websites both in India and internationally (through alliances with networks like Discover, JCB, and China Union Pay).
National Common Mobility Card (NCMC): Also known as RuPay Contactless, this allows for low-value contactless payments for transit, tolls, parking, and retail using offline technology.
Immediate Payment Service (IMPS): Launched in 2010, IMPS provides an instant, 24x7, interbank electronic fund transfer service accessible through various channels like mobile, internet, ATM, and SMS. India has become a leading country globally in real-time retail payments thanks to IMPS.
National Automated Clearing House (NACH): A web-based solution for banks, financial institutions, corporates, and government entities to facilitate interbank, high-volume electronic transactions that are repetitive and periodic (e.g., salary, pension, utility bill payments, loan EMIs). It also provides an electronic mandate platform.
Aadhaar-enabled Payment System (AePS): A bank-led model that allows online interoperable financial inclusion transactions at Point of Sale (MicroATM) through the Business Correspondent of any bank using Aadhaar authentication. It's crucial for increasing accessibility of basic banking services in underserved areas.
National Financial Switch (NFS): The largest network of shared Automated Teller Machines (ATMs) in India, facilitating interoperable cash withdrawal, card-to-card funds transfer, and other value-added services.
Bharat Bill Payment System (BBPS): A one-stop bill payment solution for all recurring payments (electricity, gas, water, telecom, DTH, loan repayments, insurance, FASTag recharge, etc.) providing an interoperable and accessible "Anytime Anywhere" service with certainty and reliability.
BBPS for Business: An expansion launched in 2024, streamlining business-to-business (B2B) payments and collections across different ERPs and accounting platforms.
National Electronic Toll Collection (NETC) FASTag: A nationwide program for electronic toll collection, enabling seamless, cashless payments at toll plazas, eliminating the need for vehicles to stop.
*99# (USSD-based mobile banking): Launched in 2012, this service allows banking customers to access various services by dialing *99# on their mobile phones, even feature phones, without an internet connection.
BHIM (Bharat Interface for Money): A mobile app that provides a simplified UPI-based payment interface for users to make instant bank-to-bank payments.
BharatQR: A common standard QR code specification developed by NPCI in collaboration with international card schemes, facilitating person-to-merchant mobile payments.
NPCI continues to drive exponential growth in India's digital payment ecosystem:
UPI Dominance: UPI has consistently broken its own records. In May 2025, UPI recorded a staggering 18.68 billion transactions in volume, with a total value of ₹25.14 lakh crore (approximately US$294.21 billion).
P2M Transactions: A significant 63% of UPI transactions in May 2025 were Person-to-Merchant (P2M), highlighting its widespread adoption for shopping and business payments.
Bank Coverage: As of May 2025, UPI was live and available with 673 banks.
Future Projections: UPI is projected to reach 1 billion transactions daily by 2026-2027, and is expected to contribute 90% of all retail digital payments in India by FY 2026–2027.
Overall Digital Growth: India has seen an unparalleled rise in digital transactions. The total digital transaction volume in FY 2024-25 reached over 260.56 trillion, a significant increase from previous years.
Security Enhancements: NPCI is constantly enhancing security measures. As of April 2025, NPCI has mandated that all UPI apps must display only the "ultimate beneficiary name" as recorded in the Core Banking System (CBS) by June 30, 2025, to reduce fraud risks from misleading display names. It is also actively leveraging Artificial Intelligence and Machine Learning in collaboration with banks to bolster customer security and detect fraudulent schemes.
Global Expansion (NPCI International): NPCI International is actively expanding UPI's global footprint, with existing partnerships in countries like Singapore, France, UAE, Bhutan, Mauritius, Nepal, and Sri Lanka. This positions UPI as a potential global payment standard.
NPCI's impact on India's digital payments landscape has been transformative:
Financial Inclusion: NPCI's initiatives, particularly UPI, RuPay, and AePS, have brought millions of unbanked and under-banked individuals into the formal financial system, enabling them to access banking services and make digital transactions.
Cashless Economy: NPCI has been instrumental in reducing the dependence on cash, accelerating India's transition towards a less-cash, more digital economy. The exponential growth in digital transactions is a testament to this shift.
Convenience and Efficiency: Products like UPI and IMPS offer instant, 24/7, seamless payment experiences, making financial transactions faster, more convenient, and highly efficient for both individuals and businesses.
Innovation Catalyst: NPCI has fostered a culture of innovation in the Indian fintech ecosystem. Its open-source and interoperable platforms encourage banks, fintech companies, and developers to build new solutions, further enhancing the digital payment landscape.
Cost-Effectiveness: By providing robust infrastructure at minimal cost, NPCI has made digital payments accessible and affordable for a vast majority of the population.
Security and Trust: Despite the massive transaction volumes, NPCI places a strong emphasis on security and risk management, continuously implementing measures to ensure the safety and reliability of transactions, building trust among users.
Global Leadership: India, largely due to NPCI's innovations like UPI, has emerged as a global leader in real-time digital payments, with other countries looking to replicate its success.
In essence, NPCI has not just built payment systems; it has built the backbone of India's digital economy, empowering citizens, businesses, and the government with efficient, secure, and accessible financial tools.