A real-time, mobile-first payment system built and run by the National Payments Corporation of India (NPCI) that lets anyone move money between bank accounts instantly using a virtual address, a phone number or a QR code.
Deep-dive lesson:Financial Inclusion and Digital Payments. This page is a quick reference that connects the term across subjects; read the lesson for the full treatment.
Before UPI, sending money in India usually meant one of three things: cash, a cheque that took days to clear, or an internet banking transfer that asked the sender to know the receiver's account number and branch code. Card payments needed point-of-sale machines that small shops could not afford, and mobile wallets locked money inside a single company's app. The result was a payments landscape in which the corner shop, the street vendor and the daily-wage worker stayed almost entirely outside the digital economy.
The National Payments Corporation of India, a not-for-profit company promoted by banks under the guidance of the Reserve Bank and the Indian Banks' Association, had already built the Immediate Payment Service (IMPS) in 2010, which allowed round-the-clock instant transfers. UPI was designed as a simpler layer on top of that plumbing. The key design choice was interoperability: any bank customer, using any participating app, could pay any other bank customer. A pilot went live in April 2016 and public apps arrived in August 2016. The demonetisation of high-value notes in November 2016 pushed millions of users towards digital payments almost overnight, and UPI was the system best placed to absorb that sudden demand.
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