How India’s UPI Model is Shaping the Future of Global Digital Payments

In a world dominated by Silicon Valley giants and Chinese fintech ecosystems, few would have imagined that India, a country once considered a laggard in digital infrastructure would emerge as a global thought leader in digital payments.

Yet, with the Unified Payments Interface (UPI), India has not only bridged its own digital divide but is now exporting a powerful new template to the rest of the world. UPI is a story of audacious public policy, open architecture, and frugal innovation converging to create a payment system that is frictionless, inclusive, and scalable.

Initially, UPI was envisioned as part of a broader mission to democratise access to financial systems. In its design, it is deceptively simple and allows anyone to transfer money between bank accounts using a mobile phone, with no need for wallets, credit cards, or even bank details. But behind the scenes lies a sophisticated and layered infrastructure that enables real-time settlement, interoperability across banks, and secure authentication that is all through an open API framework.

What really sets UPI apart, is its philosophy: it treats payments as a public utility, much like roads or electricity, rather than a monetised product. This shift has turned UPI into the rails upon which a new kind of digital economy is presently being built.

What’s less talked about, but equally fascinating is how UPI’s rise is rooted in years of quiet groundwork. The platform leveraged three major pillars: Aadhaar for digital identity, Jan Dhan Yojana for financial inclusion, and low-cost mobile internet driven by the entry of Jio. These weren’t justbackground factors, they were the accelerants. They built the infrastructure of trust in a country historically skeptical of digital transactions. UPI didn’t need to educate users from scratch; it gave them a tool that was faster, easier, and far safer than using cash.

Another often overlooked element in UPI’s story is its synergy with what is now referred to as the “India Stack”which is a collection of interoperable digital layers including Aadhaar, eKYC, DigiLocker, and consent-based data sharing mechanisms. Together, they offer the kind of unified user experience that most countries are still struggling to design. For instance, the ability to verify identity instantly via Aadhaar and eKYC means that even a daily-wage earner can open a bank account, access subsidies, or receive payments without intermediaries. For fintech startups, this ecosystem creates a fertile ground for rapid experimentation, allowing them to layer credit, insurance, and wealth management products on top of basic payment flows.

The economics of UPI are just as revolutionary. In a world where payment processors and card networks extract transaction fees from both consumers and merchants, UPI remains free. This has led to mass adoption even among street vendors and kirana shops, not because of government mandates, but because it simply works. There is a subtle genius in this: by refusing to monetize UPI in its early stages, India allowed it to scale across socio-economic classes. Monetisation, if it comes, will likely happen in layered services such as insurance, credit, and lending. 

What’s especially commendable is how UPI’s influence is going global. In recent years, countries like Singapore, UAE, Bhutan, France, Mauritius, and Sri Lanka have either integrated with UPI or signed MoUs to explore interoperability. The India-Singapore PayNow-UPI linkage is a milestone that enables instant, low-cost cross-border remittances, potentially transforming the lives of millions of migrant workers. For Global South countries facing challenges similar to India’s like underbanked populations, reliance on cash, weak infrastructure, UPI is the blueprint.

This is where UPI transcends its role as a financial tool and becomes an instrument of diplomacy and strategy. By offering to build digital payment infrastructure for partner countries, India is creating a new kind of soft power, not one based on military alliances or trade dependencies, but on shared infrastructure and trusted data systems. Unlike China’s Belt and Road Initiative, which often leads to financial entanglements, India’s digital outreach comes with fewer strings attached. This positions India as a credible, value-driven technology partner in the emerging digital order.

From a geopolitical lens, this also raises fascinating possibilities. If UPI or UPI-like protocols become the global norm for real-time payments, we could be witnessing the dawn of a “Digital Bretton Woods”, a reimagining of global financial architecture where public infrastructure takes precedence over private monopolies. Visa, Mastercard, and SWIFT, long the gatekeepers of global commerce, may find themselves increasingly bypassed by systems that are openand real-time.

For the Indian working population, UPI represents a change in user expectations. Consumers now demand real-time, frictionless, and transparent digital experiences. Whether you’re in retail, insurance, healthcare, or education, your digital strategy needs to be reimagined in light of these new behaviours. More importantly, businesses need to start thinking about digital infrastructure as an enabler, and not a cost centre. The most agile companies will be those that build or partner with platforms that ride on top of public digital rails.

The evolution of UPI is just beginning. Its potential to power real-time credit, integrate with voice payments, and function offline through sound-based tech could unlock access for the next 200 million Indians. NPCI is also exploring UPI for recurring transactions, international travel payments, and even programmable money via digital public goods. If successful, UPI could become the “TCP/IP of payments”, a universal protocol that sits beneath the surface of everyday life, invisible yet indispensable.

Ultimately, UPI is India’s gift to the world. It reminds us that with the right alignment of public policy, tech innovation, and human-centric design, even the most audacious ideas can become everyday habits. In doing so, it inspires a new generation of innovators and policymakers not just to build for scale, but to build for inclusion, trust, and most importantly, for impact.

By Dr. Suresh Ramanathan, Dean & Yash Merchant, Director – Brand Marketing at Great Lakes Institute of Management, Chennai.