The Unified Payments Interface (UPI) is an Indian instant payment system and protocol, not an act or institution, developed by the National Payments Corporation of India (NPCI). It was officially launched on April 11, 2016, with the goal of transforming India into a digital economy. The system was created to solve the problem of low non-cash transactions per capita and the complexity of existing inter-bank transfer systems like NEFT and RTGS, aiming for a simple, secure, and interoperable platform.
UPI works by facilitating real-time, inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions using a mobile device. The core mechanism involves a unique identifier called the Virtual Payment Address (VPA) or UPI ID (e.g., username@bankhandle), which eliminates the need to share sensitive bank account details. A transaction is initiated via a UPI-enabled app and authorized by the user's secure UPI PIN. The request is then routed through the NPCI's UPI switch for validation and instant debit/credit between the linked bank accounts.
The system is regulated by the Reserve Bank of India (RBI) and is built on the underlying Immediate Payment Service (IMPS) infrastructure. Recent changes include the RBI increasing the transaction limit for payments to hospitals and educational institutions from ₹1,00,000 to ₹5,00,000 on December 8, 2023. Furthermore, new operational guidelines from August 2025 introduced caps, such as limiting balance checks to 50 per day per app, and restricting the execution of Autopay mandates to off-peak hours to improve system stability. The ability to link RuPay credit cards to UPI was also introduced from June 8, 2022.