RBI Deputy Governor Highlights Potential for UPI User Base to Reach 1 Billion in India

India's digital payment landscape is poised for significant growth, with the potential to expand its Unified Payment Interface (UPI) user base from 400 million to 1 billion, according to Reserve Bank Deputy Governor T Rabi Sankar. Currently, India accounts for half of the world's retail payment transactions. However, the number of digital transactions per person still lags behind many developed nations.

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The National Payments Corporation of India (NPCI), an RBI-promoted entity, launched a USSD-based service in 2016. This initiative aimed to provide UPI access to feature phone users shortly after the main platform was introduced for smartphones. The Deputy Governor highlighted that digital payments have transformed India's financial landscape, promoting inclusivity.

UPI's Role in Digital Transactions

UPI has become the dominant payment method in India, facilitating both Person to Person (P2P) and Person to Merchant (P2M) transactions. It processes about 81% of the country's retail payment transactions by volume. UPI allows users to link multiple bank accounts into a single mobile application, enhancing convenience and accessibility.

The Reserve Bank has been working on linking UPI with Fast Payment Systems (FPSs) of other countries on a bilateral basis. This linkage currently operates with Singapore since February 2023, and similar projects with the UAE and Nepal are underway. Such initiatives enable seamless inward and outward remittance payments.

Global Expansion and Economic Impact

India's UPI apps are now accepted via QR Code in several countries, including Bhutan, France, Mauritius, Nepal, Singapore, Sri Lanka, the UAE, and Qatar. This development allows Indian tourists, students, and business travellers to make payments using their Indian UPI apps abroad. The Deputy Governor cited a study indicating that a 10% increase in digital payments could boost GDP by 0.3%.

Digital payments have surged due to collaborative efforts between the government and stakeholders. The total value of digital payment transactions rose from Rs 2,071 crore in FY 2017-18 to Rs 22,831 crore in FY 2024-25, reflecting a compound annual growth rate (CAGR) of 41%. This growth underscores UPI's pivotal role in India's digital economy.

Security Measures and Future Prospects

To enhance cybersecurity, the Reserve Bank has implemented various measures, including the 'mule hunter' initiative to combat digital frauds. The Deputy Governor emphasised that there is still considerable potential for growth in digital payments. He noted that a housewife can now securely run a small business from home using UPI.

The Deputy Governor also compared India's digital transaction rate per person with Kenya's, where it is approximately double. This highlights the need for further expansion in India. As digital payments continue to grow, they are expected to play an increasingly vital role in India's economic development.

With inputs from PTI