The Unified Payments Interface, India’s most significant digital public infrastructure, is set for another transformation. Since its launch in 2016, UPI has reshaped the country’s payments ecosystem—clocking 18.67 billion transactions worth ₹25.14 trillion in May 2025 alone, and accounting for over 83% of India’s retail payment volumes, according to the Reserve Bank of India’s FY25 annual report.
Its next frontier is integration with the Internet of Things. The National Payments Corporation of India (NPCI) is developing an IoT-enabled UPI framework that will allow smart appliances—such as refrigerators, smartwatches, and connected cars—to make autonomous payments without the need for mobile phones. The upgraded system is expected to be unveiled at the 2025 Global Fintech Fest.
READ | Critical minerals central to Quad’s regional security plan
Autonomous payments: A new UPI architecture
At the core of this innovation is a system where each smart device gets a unique virtual payment address (VPA), linked to the user’s primary UPI ID. These devices will be able to process recurring payments—say for subscriptions or utility bills—through UPI AutoPay. A one-time password (OTP)-based authentication during onboarding will establish user control and security parameters. For example, a smart TV could automatically renew a streaming subscription once it expires, without requiring any user action.
Importantly, the user must pre-authorise such delegated payments and set transaction limits. The regulatory approval from the Reserve Bank of India is pending, and the system builds upon UPI Circle, a precursor launched in 2024.
NPCI has set an ambitious target: enabling the digital payments portal to process 1 billion transactions a day by FY27. The expansion into the $5.4 trillion global IoT payments market projected for 2028 is a step in that direction.
Domestic utility and rural reach
The appeal of IoT-integrated Unified Payments Interface lies in its seamlessness. For consumers, it embeds payments into everyday activities, increasing convenience. For businesses, it offers a cost-effective, interoperable solution that can reduce friction in commerce.
Despite its urban success, rural adoption remains patchy. While Aadhaar and Jan Dhan account linkages have boosted usage, cash continues to dominate rural economies. According to recent estimates, the shift to digital payments since 2016 has saved India nearly $67 billion, largely by reducing cash handling and leakages.
To accelerate rural digitisation, the government must sustain and expand financial incentives for instant payment method’s use. Voice-based Interactive Voice Response (IVR) systems for feature phones and user-friendly interfaces for low-literacy users could help bridge the divide.
Building a global UPI footprint
Beyond domestic markets, UPI is becoming a tool of economic diplomacy. Its international arm—NPCI International Payments Ltd (NIPL)—has already established partnerships in 10 countries, including the US, UK, UAE, and France. Indian tourists can now pay at sites like the Eiffel Tower using UPI QR codes. Integration with Greece’s Eurobank and Thailand’s PromptPay supports remittances and tourism-linked transactions.
Non-resident Indians (NRIs) in these countries can now transact using international mobile numbers, expanding financial access and inclusion. As cross-border remittance corridors integrate with Unified Payments Interface, Indian expats can send money home instantly, sidestepping high banking fees and transfer delays.
This is particularly significant in a country that receives over $100 billion in remittances annually. Reducing transaction costs aligns with broader global financial inclusion goals.
E-commerce and the global digital economy
UPI’s potential also lies in supporting cross-border e-commerce. As more international platforms cater to Indian buyers, UPI could serve as a low-cost, fast, and secure payment option. For Indian sellers too, it can open access to global buyers in countries where UPI is gaining ground, including Nepal, Sri Lanka, Singapore, France, UAE, Mauritius, and Bhutan.
Discussions are underway to expand UPI’s footprint to 30 more countries. If realised, this could position UPI as a global digital payments standard and strengthen India’s stature in the fintech world. Notably, Google CEO Sundar Pichai recently acknowledged that Google Pay in India functions entirely on UPI rails, underscoring the system’s robustness and global appeal.
Scaling securely
With growth come challenges. Autonomous payments via IoT devices introduce new cybersecurity risks. While UPI’s layered security has so far proven resilient, social engineering and phishing remain active threats. Industry experts have stressed the need for device-specific safeguards and adaptive fraud detection as new access points multiply.
Equally important is infrastructure resilience. Handling a billion transactions a day will test the system’s scalability. Standardised APIs, UPI Lite, and other backend enhancements are aimed at boosting capacity. But ensuring uptime and transaction integrity at scale remains a work in progress.
UPI’s success rests on its fundamental strengths: interoperability, zero-cost usage, and government backing. But to reach the next milestone—whether through IoT, rural inclusion, or global expansion—NPCI and its partners must focus on security, usability, and infrastructure robustness.
With sustained policy support, UPI can evolve from being a domestic innovation into a globally recognised standard. As digital payments become embedded in everything from wristwatches to refrigerators, India may well lead the way in redefining how the world pays.