The Unified Payments Interface (UPI) is an instant payment system and protocol, not an act or institution, developed by the National Payments Corporation of India (NPCI), an entity regulated by the Reserve Bank of India (RBI). It was officially launched for public use in 2016, with the pilot launch taking place on April 11, 2016, under the guidance of the RBI. The system was created to solve the problem of low non-cash transactions and the need for a simple, secure, and interoperable payment mechanism.
UPI is built on the Immediate Payment Service (IMPS) infrastructure and facilitates real-time inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions. Its core mechanism allows a user to link multiple bank accounts to a single mobile application and transact using a unique identifier called the Virtual Payment Address (VPA), such as name@bank, eliminating the need to share bank account details. Transactions are secured by a UPI PIN and can be initiated via a 'push' (send money) or 'pull' (request money) mechanism. The ecosystem involves Payment Service Providers (PSPs), which are banks, and Third-Party Application Providers (TPAPs), which are the mobile apps.
The standard daily transaction limit for most transfers remains ₹1 lakh. However, the RBI enhanced the per-transaction limit for payments to hospitals and educational institutions from ₹1 lakh to ₹5 lakh in December 2023. Recent changes also include the launch of UPI 2.0 in August 2018, which allowed linking overdraft accounts, and the provision to link RuPay credit cards with UPI from June 2022.