UPI's Potential in Value-Added Services Untapped
A new industry report finds that the full potential of UPI and RuPay in value-added services is far from being realized. While UPI has succeeded in peer-to-merchant payments, the report suggests there is significant scope for deeper integration into loyalty programs, credit products, and other merchant services. However, it also warns that scaling these services will require overcoming existing technical and regulatory hurdles.
- The National Payments Corporation of India (NPCI) and Boston Consulting Group (BCG) released a report at the Global Fintech Fest 2025 highlighting UPI's growth to over 500 million consumers and 65 million merchants. This report notes that UPI now accounts for nearly half of all global real-time payment volumes and is present in 99% of India's pin codes. - A key development in value-added services is the integration of pre-approved credit lines directly into UPI, allowing users to make payments from a credit line instead of their bank account. This feature is designed to digitize the entire credit process, removing the need for physical credit cards for small, everyday transactions. - RuPay is currently the only credit card network that can be linked directly to UPI apps for QR code-based merchant payments. While there are generally no direct charges for consumers on these transactions, merchants may pay a Merchant Discount Rate (MDR) for payments over Rs. 2,000. - UPI's transaction volume has seen massive growth, reaching a record 21.63 billion transactions in December 2025 with a value of ₹27.97 trillion. For the 2023-24 fiscal year, UPI processed 131 billion transactions, a tenfold increase over four years. - To manage the high transaction volume and ensure system stability, the NPCI implemented new usage limits in August 2025. These include a cap of 50 daily balance checks per UPI app and specific time windows for processing recurring payments via UPI AutoPay. - The next phase of development, often referred to as UPI 3.0, is expected to include more advanced features like conversational voice payments and deeper integration with AI-driven interfaces. - Globally, UPI is expanding its footprint, with plans to launch in four to six more countries by 2025, targeting regions popular with Indian tourists like Qatar and Thailand. It is already accepted in seven countries, including Singapore, UAE, and France. - Despite its success, UPI faces ongoing challenges, including technical glitches leading to outages, cybersecurity threats, and regulatory hurdles that require continuous technological upgrades to maintain user trust.
