MUMBAI: Nearly one in two real-time payments in the world happen on the UPI platform. From 1.8 crore transactions in FY17, the year it was launched, to 24,162 crore transactions in FY26, UPI transactions have grown 13,000 times.Today, the payment platform completes 10 years since it went live for general public use after its initial launch by then RBI governor Raghuram Rajan through a pilot test in April 2016. How did the most successful innovation under NDA govt come about?According to AP Hota, founding chief of National Payments Corporation of India, during whose term most of NPCI’s products, including UPI, were launched, the idea originated from a dilemma over how to increase the use of IMPS (Immediate Payment Service). IMPS was a real-time payment platform built by repurposing the national financial switch infrastructure created for ATM transactions which required real-time debits from bank accounts. Before IMPS, electronic payments largely mimicked traditional payments, with transactions taking place in batches.Initial brainstorming showed that merchants needed to receive money immediately, which cards could not provide. While IMPS enabled person-to-person transfers, it was not designed for customers who wanted to pull money.“UPI began as an attempt to redesign IMPS so as to simplify merchant payments, involve non-bank payment providers, reduce e-commerce payment failures, and adopt open-source technology and APIs. These objectives led us to move away from IMPS and build an entirely new solution, retaining only its proven real-time settlement engine,” said Hota.“Pramod Verma (technology architect who helped design UPI’s API-driven architecture and played a key role in shaping its open, interoperable framework) became involved, while Nandan Nilekani was already with us as our technology and public policy adviser. Pramod and Nandan came up with the idea of making the entire system API-driven, with third-party application service providers,” said Hota, who worked with banks and fintech companies to expand the network.Dilip Asbe, current chief of NPCI, who was COO at the time of the launch and led much of the implementation, explained the design in a podcast with Verma in Aug last year. UPI’s scale, they said, came from designing it not as a centralised application with a massive database but as a decentralised, open protocol that resolves payment addresses in real time across participating banks.The architects built advanced capabilities into the core protocol while adopting a phased rollout, starting with basic peer-to-peer transfers before introducing features such as recurring mandates.While UPI’s scale is now measured in billions of transactions, Hota had forecast in his 2017 farewell speech that the platform would achieve a billion transactions a day within a few years.
