UPI global expansion: India’s digital payments ecosystem is a domestic success. Its digital public infrastructure is also beginning to extend beyond national borders. UPI is gaining traction overseas, and in FY2025-26, global UPI transaction volumes crossed the one-million mark for the first time, reaching 1.48 million as of December, up from 0.75 million in FY25, according to recent reporting and official references to UPI’s overseas rollout.
In value terms, transactions rose to Rs 330.43 crore from Rs 258.53 crore in the previous year. The acceleration is sharper when compared with FY24, which saw just 37,060 cross-border transactions worth Rs 19.7 crore. The numbers are still small relative to UPI’s domestic scale, but they show early consolidation of an Indian payments architecture in international markets.
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Since its launch in 2016, UPI has become one of India’s most consequential digital public systems. It processes billions of transactions every month and accounts for the bulk of person-to-person and merchant digital payments. It has lowered transaction costs, reduced settlement delays, and expanded access. Its distinctive feature is public governance at a scale comparable to, and in some cases beyond, private card networks.
UPI global expansion is moving from pilots to corridors
UPI’s international expansion is being led by NPCI International Payments Ltd, the overseas arm of the National Payments Corporation of India. UPI is operational in eight countries: Bhutan, Nepal, Mauritius, Sri Lanka, Singapore, the United Arab Emirates, Qatar, and France. Official and recent sources also point to a widening pipeline of international discussions beyond the current footprint.
In several markets, rollout began in phases, initially targeting Indian tourists and diaspora communities. NIPL has onboarded more than two million international merchants, according to recent coverage.
Much of UPI’s cross-border usage is still driven by Indian travellers making QR-based retail payments abroad. That matters because it reduces foreign exchange handling frictions, improves transaction transparency, and offers familiar payment behaviour to Indian consumers.
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But the ambition is larger: to embed UPI into bilateral payment corridors, enable real-time remittances, and support merchant payments in local currencies through interoperable systems.
A critical design question sits underneath that ambition. International scale will not come from merchant acceptance alone, but from the architecture of interoperability: whether UPI connects to another country’s real-time payment system, rides card-acquiring rails for merchant acceptance, or uses hybrid arrangements that separate front-end payment initiation from back-end settlement. The Singapore PayNow linkage shows the first model is feasible, but it is harder to replicate than QR acceptance for travellers.
Cross-border remittances will depend on cost efficiency
Cost efficiency will determine whether UPI’s globalisation goes beyond symbolism. Traditional cross-border payments involve multiple intermediaries, wide foreign exchange spreads, and settlement lags. If UPI linkages scale, they could lower remittance costs for migrant workers, especially in India’s corridors with the Gulf and Southeast Asia. The India-Singapore UPI-PayNow linkage was explicitly framed as a low-cost, instant cross-border transfer arrangement.
There is also a diplomatic layer. Many emerging economies face fragmented digital payments infrastructure and high dependence on costly card-network rails. UPI’s open, API-driven architecture offers a replicable public digital template. India is increasingly presenting digital public infrastructure as part of its development partnership with Global South countries. In that frame, payments integration is not just a commercial export. It is also technological statecraft.
Payments strategic autonomy is part of the UPI story
UPI also speaks to strategic autonomy in payments infrastructure. Global payment systems remain dominated by a small number of private networks headquartered in advanced economies. In a more polarised world, where sanctions and data governance standards are contested, countries are looking for diversified payment rails.
UPI is not a direct rival to established card networks in advanced markets. But in emerging economies, even limited interoperability agreements can create alternatives and reduce dependence on concentrated systems.
The competitive benchmark, however, is not only global card networks. In many countries, the real barrier will be entrenched domestic instant payment systems and local switching arrangements. Any UPI corridor will therefore have to fit into existing national payment priorities rather than displace them outright.
Regulatory compliance will decide UPI adoption abroad
Scaling abroad will be harder than scaling in India. Data localisation rules, consumer protection standards, anti-money laundering compliance, and foreign exchange regulations differ across jurisdictions. These will be operational bottlenecks, not peripheral issues.
Consumer protection will also become more complex in cross-border usage than in domestic transactions. Failed transaction reversals, refund timelines, liability allocation in fraud cases, dispute handling across legal jurisdictions, and transparency in exchange-rate conversion at checkout will all shape trust and repeat usage.
And for UPI to move beyond Indian tourists, local merchants and banks need a commercial reason to adopt it. Transaction fees, settlement reliability, dispute resolution, and integration costs will shape adoption. In some countries, domestic payment systems or incumbent card networks may resist displacement. In others, concerns about integrating a foreign payments infrastructure may slow progress.
The institutional route to scale will also vary by market. In some corridors, banks will remain central because they control regulated settlement access and compliance infrastructure. In others, non-bank fintechs may drive merchant acceptance and front-end integration faster. UPI’s overseas expansion will depend on how well these roles are aligned, not on user demand alone.
Local currency settlement is the next real test for UPI
Currency settlement remains a structural issue. Many international UPI transactions still depend on existing banking channels for foreign exchange conversion. Deeper integration will require bilateral arrangements that enable local currency settlement.
India is discussing real-time payment linkages across countries in multilateral forums. But operationalising these linkages at scale is both technically complex and politically demanding.
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There are early indications of interest beyond the current eight countries, including discussions involving markets such as Japan and Malaysia, as reported in recent coverage. Each new corridor will test UPI against different regulatory cultures, use cases, and technology standards. Success in advanced markets would matter because it would show Indian digital infrastructure can meet tighter compliance and security benchmarks.
That makes corridor selection a strategic decision, not an expansion checklist. The best early candidates are not simply high-visibility markets, but those where tourism flows, remittance volumes, diaspora presence, regulatory compatibility, and local partner readiness overlap.
UPI zero MDR model raises sustainability questions
UPI’s global expansion also revives a familiar domestic criticism: the non-sustainability of the zero-merchant discount rate model. International expansion will sharpen questions around revenue models, cost recovery, and incentives.
Those questions are not abstract. Someone must fund merchant acquisition, switching connectivity, compliance operations, fraud controls, dispute management, and cybersecurity upgrades. If acquirers, PSPs, and partner banks do not see a viable economics stack, rollout will remain limited to showcase deployments.
Operational resilience is part of the same problem. Cross-border payments require dependable 24×7 uptime, fraud monitoring across time zones, incident response coordination, and periodic security assurance across partner systems. Scale will expose these demands quickly, even if early transaction volumes remain small.
If UPI is to evolve into a durable cross-border public infrastructure, funding for cybersecurity upgrades, dispute management systems, and international integration cannot remain vague.
For now, the direction is clear. UPI has moved beyond being only a convenience tool for Indian travellers. Whether it becomes a substantive cross-border payments architecture will depend less on early adoption numbers and more on regulatory execution, settlement design, commercial viability, and measurable corridor outcomes such as repeat usage, merchant density, transaction failure rates, and remittance cost reduction.