India tops global charts for fastest payments, UPI leads the change: IMF

India now leads the world in making the fastest retail digital payments, thanks largely to the explosive growth of the Unified Payments Interface (UPI). According to the International Monetary Fund’s (IMF) Fintech Note titled, Growing Retail Digital Payments: The Value of Interoperability, UPI has transformed India’s payment ecosystem since its launch in 2016.

The report says that India outpaces all other nations in fast payment systems, attributing this achievement to UPI’s interoperability, scalability and widespread adoption.

The IMF analysis emphasises that proxies for cash usage—such as ATM withdrawals—have shown a marked decline since UPI became prominent. The system now processes more than 18 billion transactions per month, overtaking other electronic retail payment methods in the country.

Interoperability at the core of UPI’s success

The IMF note credits the success of UPI to its interoperable design, which enables seamless transactions between users of different banks and payment providers. Unlike closed-loop systems such as individual digital wallets, interoperable frameworks like UPI allow for greater adoption and easier integration, driving up overall digital payment usage.

The IMF’s research presents evidence suggesting that total digital transactions—relative to cash withdrawals—rise significantly in regions where interoperability is more widely implemented. This trend persists over time, reinforcing the role of open and connected platforms in encouraging users to move away from cash-based transactions.

Estimating cash usage remains a challenge due to the informal nature of many cash transactions. However, the IMF approximates this by analysing ATM withdrawal volumes across Indian districts. The data reveal a clear correlation: areas with higher levels of UPI integration show a steeper and sustained decline in ATM usage.

UPI’s ability to integrate multiple bank accounts, facilitate real-time payments and offer app-agnostic utility has shifted the behavioural pattern of users toward digital-first transactions.

In addition to convenience, features such as QR code payments, instant confirmations and voice-enabled notifications have helped small businesses and vendors adopt digital payment modes confidently.

Massive transaction volume and financial inclusion

According to a government release in December last year, UPI’s monthly transaction volume crossed Rs23.49 lakh crore through 16.58 billion transactions in October 2024, reflecting a 45 per cent year-on-year growth compared to October 2023. With 632 banks now live on the UPI platform, its dominance is unmistakable in India’s digital financial infrastructure.

Crucial to this adoption is the accessibility of UPI-powered apps that allow users to choose from different service providers, independent of their banking institution. This democratisation of payments has not only increased consumer trust but also minimised the friction typically associated with transitioning from cash to digital, the release said.

Global recognition and cross-border expansion

India’s payment innovations are no longer confined within its borders. UPI’s global growth is facilitated through partnerships via NPCI International Payments Ltd (NIPL), which collaborates with foreign banks and payment networks. These efforts often involve QR-code-based payments and point-of-sale (POS) integration, making UPI accessible to Indian tourists and businesses abroad.

UPI is now operational in at least seven countries, including France, UAE, Bhutan, Nepal, Mauritius, Sri Lanka, Qatar and Singapore.

Bhutan was the first country outside India to accept UPI through the BHIM app, setting the stage for wider international adoption. In Europe, France made headlines in 2024 by becoming the first European country to accept UPI, initially enabling it at the Eiffel Tower and expanding it to various tourism and retail sectors with support from Worldline and the Indian Embassy.

The United Arab Emirates (UAE) embraced UPI in 2021 through a partnership with Mashreq Bank and LuLu Financial, leading to its availability at over 60,000 retail outlets, including airports.

In 2024, Nepal joined the network by linking UPI with its National Payments Interface via Fonepay and Gateway Payments Service, providing coverage in retail areas and tourist destinations.

Mauritius also started accepting UPI in 2024, enhancing digital financial inclusion with the simultaneous launch of RuPay card services.

Sri Lanka adopted UPI in key areas such as Bandaranaike International Airport and Dialogue Experience Centres through the LankaPay network. Singapore, which enabled cross-border UPI payments with PayNow in 2023, offers UPI acceptance at tens of thousands of retail locations using apps like Google Pay and Paytm.

Future expansions include Malaysia, Qatar and Thailand, all of which are expected to enable UPI as part of NPCI’s Southeast Asia and West Asia growth strategy. Incidentally, Cyprus is the latest country to join this expanding list this month itself.

The United Kingdom is currently undergoing phased integration of UPI, supported by MoUs and gradual implementation across select merchants and airports.

Oman and the Maldives have also expressed interest, with ongoing discussions and preliminary agreements aimed at facilitating UPI payments for Indian travellers, particularly in tourism-driven regions.

Policy safeguards and market competition

While UPI’s rapid rise has been largely beneficial, the IMF cautions that the platform’s future success depends on maintaining a level playing field. As the ecosystem matures, regulators must stay vigilant against potential market dominance by a few private entities. The IMF note urges policymakers to employ diverse metrics for monitoring competition and to tailor regulations that ensure continued openness and innovation.

They also recommend that system operators engage regularly with private stakeholders to make sure platform design choices reflect the needs of all participants, supporting a dynamic and competitive interoperable ecosystem.

A digital destiny

India’s leadership in fast payment systems stands as a testament to the power of digital innovation backed by public infrastructure.

The IMF’s latest findings affirm that interoperable platforms like UPI can catalyse the transition from cash to digital, with a measurable impact on transaction volumes, financial inclusion and global influence.

As India prepares to take UPI to more international markets, its model offers valuable lessons for countries aiming to modernise their payment systems.