What is UPI, and why you should offer this local payment method in India?

With a user base of 300 million and 500 million merchants, UPI has played a transformative role in reshaping India’s financial landscape. Learn more about this payment method and why should global brands offer it when selling in the country.

João Paulo Notini
September 25, 2023
4 min read
upi in india

In the ever-changing world of global business, adaptability is essential. Understanding local payment methods like UPI (Unified Payment Interface) is vital to thrive in India’s dynamic digital market.

This article will demystify UPI, discuss its importance for Indian businesses, and unveil how it can transform your operations.

What is UPI?

Available 24/7, the Unified Payments Interface, or UPI, is a real-time payment system launched in 2016 by the National Payments Corporation of India (NPCI). It empowers users to connect multiple bank accounts to a single mobile app, enabling seamless peer-to-peer (P2P) and person-to-merchant (P2M) single or recurring transactions. 

UPI has revolutionized digital payments, allowing for effortless bank transfers via mobile devices and VPAs. This innovation bridges urban-rural divides, promotes financial inclusion, and simplifies transactions using UPI IDs, QR codes, and VPAs, all while eliminating transaction costs.

UPI has witnessed remarkable growth in India. It has become the preferred method for digital transactions, overtaking traditional methods like cash and cards. With UPI, users can link their bank accounts to a single mobile app, streamlining payments and enabling various financial activities.

According to EBANX’s Beyond Borders study, in 2022, UPI took the lead in India’s digital payment scene, handling a staggering 74 billion transactions amounting to nearly 1.6 trillion dollars. With a user base of 300 million and 500 million merchants, UPI has played a transformative role in reshaping India’s financial landscape.

upi unified payment interface customer

Why You Should Offer UPI as a Payment Method?

Now, let’s explore why UPI is crucial for businesses seeking to establish a foothold in India:

  • Market Access: India boasts a vast and diverse consumer base. By offering UPI as a payment option, you tap into a massive digital commerce market expected to achieve 35% growth over the next four years, according to EBANX’s Beyond Borders study. By 2027, it is projected to surpass the milestone of USD 200 billion in volume.
  • Consumer Preference: Indian consumers prefer the convenience and security of UPI. Meeting this preference enhances your brand’s appeal and fosters trust.
  • Reduced Costs: UPI transactions often incur lower fees than traditional banking methods. This can result in significant cost savings for your business.
  • Efficiency: UPI is available 24/7 and enables swift fund transfers, which can be especially advantageous for businesses requiring rapid payments or disbursements. With over 600 million smartphone users, India has embraced digital payments, especially UPI, to cater to the growing consumer preference for quick and easy purchasing.
  • Enhanced Security: UPI transfer employs robust encryption protocols, safeguarding sensitive data and minimizing cyber threats.
  • Government Support: The Indian government actively promotes digital payments, including UPI. By aligning with government initiatives, your business gains credibility and support.

How do you implement UPI in your business?

Similar to Pix in Brazil, as UPI continues to evolve, it’s poised to play an even more significant role in India’s digital economy. Thus, integrating UPI into your business operations is a strategic move. 

Here’s how to get started:

Choose a Payment Partner

Select a reliable payment gateway that supports UPI transactions. Ensure it offers robust security features to protect sensitive customer data.

Develop User-Friendly Interfaces

Create intuitive user interfaces that facilitate UPI payments on your website and mobile app. The goal is to make the payment process seamless for customers.

Educate Your Team

Train your staff to understand the nuances of UPI transactions. This ensures they can assist customers effectively and resolve any payment-related issues.

Promote UPI

Actively promote UPI as a payment option to your customers. Highlight its benefits, such as convenience, security, and cost-effectiveness.

Stay Compliant

Keep abreast of UPI-related regulations and compliance requirements. This ensures your business operates within the legal framework.

Alternative Payment Methods are Key to Unlocking Online Sales in India

Digital payments, led by UPI, have shown remarkable growth in India, surging by an impressive 527% from 2017 to 2023.

This surge resulted in 130 billion transactions, totalling over USD 4 trillion. For businesses relying on online sales and either currently operating in India or considering expansion, offering UPI and other alternative payment methods is crucial to success.

To make this transition seamless, partnering with a top-performing payment solution provider like EBANX is the easiest way forward. Are you ready for secure, real-time payments?

[Start offering UPI with EBANX]

João Paulo Notini
João Paulo Notini
Senior Content Marketing | Cross-Border operations at EBANX

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