When you take an elevator, you are mostly looking at your phones. Pretend to read that mail in spam folder, scroll through WhatsApps and if you are a completely pathetic nuisance then watch Reels in loud music.

I wonder what people were doing in elevators before smartphones… Maybe reading instructions, staring at your own shoes or calculating if the weight of all people is within limit. .

Anyway, the point is not about the elevator. The point is what life was like before UPI.

Yes, it’s been 10 years since UPI was launched.

A ground breaking idea that started in April 2016 with 21 banks is now the world’s biggest Real Time Payment rail (Hurray!) and last year UPI surpassed Visa (Hurray, again!).

Today UPI has become omnipresent and omnipotent, it can solve any payment related problems/requirements (except the bribe which is still in cash). UPI has transcended age and economical stature of people and it has gone beyond the borders of India.

Humans and UPI

My payments journey started before the existence of UPI. I was busy selling payment aggregation to merchants and mostly talking about cards, prepaid cards, and net-banking (yes, who had more banks was an USP), and then came UPI.

In the last 10 years, UPI has impacted both personally as well as professionally.

For me UPI is not just about an awesome free payment instrument and various experiences and stories. I am sure those who were part of this journey (building, selling, promoting, using etc.) have their own stories.

Here are few of those:

• Initial Days:

In 2016–17, payments industry leaders had different views of UPI. Traditional folks ignored it and kept pushing Net-Banking (good volume & good margins), few new FinTechs took a bet on UPI, and few simply sat on the fence (let’s see where it goes!).

PhonePe was founded for UPI but in early months PhonePe had more card traffic than UPI. And then UPI started evolving and scaling!

• UPI didn’t play much role during demonetization

One of those Black Swan events that gave push to digital commerce. But strangely UPI didn’t play a big role during the early days of demonetization. It was the PayTM wallet.

On 30-Dec-2016, BHIM was launched.

UPI did play a big role during pandemic… When migrant population of cities moved to smaller towns, they also took their knowledge of paying with UPI.

In a way UPI is one of those products which cross from India to Bharat.

• Google Pay:

Today we have many UPI Apps / TPAPs and each gives some incentive (cashback, rewards, coins etc.) to users. Few of those incentives are more useless than the other useless ones.

So far the best App to give incentive was Google Pay’s scratch cards… It was awesome, it was fun and it was unpredictable. Eventually cashbacks dried out and the message ‘Better Luck next time’ reminded me of all the rejections from HR recruiters so I decided to delete that App.

• Zero ‘dark’ MDR

On 1st Jan 2020, UPI MDR became zero. The government wanted to push digital payments and decided to make UPI free. It had a big impact on the ecosystem that wanted to make some revenue or margin. And on top PAs had to do a lot of work in terms of informing merchants, signing addendums and changing fee configs. Anyway, FinTechs stopped charging MDR and renamed it as ‘platform fee’ or ‘infra fee’. :)

• PhonePe — The Phoenix

In 2020, RBI’s moratorium on Yes Bank impacted all FinTechs and PAs who were using Yes Bank for payment processing. The biggest impact was on PhonePe as it was blacked out for a couple of days. Despite this setback, PhonePe bounced back and even today it is the biggest UPI App. Kudos!

• Going Global

Many countries have their own RTP / fast payment rails but those are limited to their own countries or at best to the neighbourhood countries.

UPI was bravely expanded outside India. India users can pay using UPI in other countries, interlining of UPI and other RTPs for remittance. NIPL is helping other countries to their on UPI (and Rupay). Truly going above and beyond!

• UPI Tax:

In July 2025, shops in Bangalore started receiving GST notices based on their UPI collections. Newspapers started calling it ‘UPI Tax’.

Many small shops stopped accepting UPI and then went on strike to protest against GST notices. Eventually things settled down and shops are back on the UPI network.

For a moment it looked like a challenger had emerged for UPI… that is UPI.

Of course UPI has reduced usage of cash and we tend to spend more. But an interesting story is ‘how UPI impacted the sale of toffees’ by Growth X founder. (Link).

Evolution of UPI (from Circulars)

For the past ten years, NPCI has been relentlessly shaping the UPI and related products/features. NPCI’s circulars show the journey of UPI.

UPI — Road ahead

It is granted that UPI is here to stay and grow not only in India but also in many countries. Still there are few tough questions or challenges.

• Concentration Risk:

UPI is an interoperable platform. But there is huge concentration risk at various levels of UPI ecosystem.

• NPCI (the apex entity that runs NPCI)
• PhonePe and Google Pay combined control 85% of the market share of UPI Apps
• Acquiring banks (Yes, Axis, HDFC, SBI)

NPCI is not happy with duopoly in the UPI App space. Since Nov ’20, NPCI has been planning to enforce 30% capping on TPAP but is not able to do so. The next deadline is 31-Dec-2026.

NPCI is approving many TPAPs, BHIM App (3.0 version) is being promoted aggressively, user capping of WhatsApp is removed but still the duopoly continues.

• Will UPI have MDR?

Looks like NO.

UPI has become too big and too sensitive for any Government to bring MDR and then face wrath of users. Although a small MDR may not create a big problem, misinformation and fake news may create more confusion. So the Government will avoid it.

The subsidy is nowhere sufficient to cover the costs so banks will pass the cost to customers in some other form (No free lunches).

• Did UPI kill innovation?

Maybe.

UPI has solved everything related to payments and it is economical. So there is nothing much to do in terms of innovation as NPCI does that work.

For those who really want to do innovation then they have many other areas to work on.

• The frauds

The digital payments boom also increased digital frauds. Fraudsters have figured out innovative ways to con people. The payments ecosystem (RBI, NPCI, Banks, TPAPs) have implemented various processes and policies to stop the fraud proactively as well as reactively.

Was the speed of UPI one of the reasons for fraud? Maybe, the RBI is proposing to reduce the speed (delayed the settlement) and additional authorization for senior citizens.

UPI is one of those great stories of this great country that we all should be proud of. Kudos to everyone who played a role in this UPI story.

103. Ten years of UPI was originally published in Auth-n-Capture on Medium, where people are continuing the conversation by highlighting and responding to this story.

Vision.

Sorry…. Not this Vision.

You should refer to RBI’s Vision.

I. Past is Prologue

RBI has been publishing vision documents for more than two decades. Each vision period is of 3–4 years and has put a strong foundation for payments that we see today.

II. Score Card of Payments Vision 2022–2025.

The last payments vision document was quite comprehensive and with goals spread across 5 different areas: Integrity, Inclusion, Innovation, Institutionalization and internationalization

III. Vision document 2026–28

Payments vision document talks about 15 goals, significantly smaller than the earlier vision document. I have segregated them into various areas.

102. Payments Vision 2028 was originally published in Auth-n-Capture on Medium, where people are continuing the conversation by highlighting and responding to this story.

A. Master Direction on Regulation of Payment Aggregator

On 15th September, RBI issued the Master Direction on Regulation of Payment Aggregator (PA) that will replace all earlier guidelines and govern all types of PAs: PA-Online, PA-Physical and PA-Crossborder {Inward and outward) transactions.

• Provided clarity to approval/authorization process; made it simple
• Brought in uniformity in merchant KYC and Due Diligence process
• Defined escrow account management for various types of PAs
• Charted out Base line technology recommendation

B. Direction for Authentication mechanism

In September, RBI issued Directions for Authentication Mechanisms for Digital Payment Transactions that can enable biometric based authentication.

The directions will come into effect on 1-Apr-2026, and are applicable to all domestic digital payments with few exceptions (recurring payments, NFC, NETC, UPI Lite etc.)

C. MD on Cyber Resilience and DPSC came into effect

On 1-April-2025, Master Directions on Cyber Resilience and Digital Payment Security Controls for non-bank Payment System Operators (PSOs).

This is one of the most important directions issued by the RBI that covers — Governance control, Digital Payment Security measures and baseline information security measures.

D. Draft Guidelines to simplify cross-border inward remittance

In Nov-2025, RBI issued draft guidelines to address the delays and bring more transparency to cross-border inward remittance.

The draft guidelines cover the timely update to customers about remittance, frequent reconciliation of Nostro Account, and providing digital interface to users to check the status of remittance.

E. Draft Guidelines to bring transparency in Foreign Exchange Rates

In Dec-2025, RBI issued draft guidelines to bring transparency to foreign exchange rates wherein the banks are expected to disclose the various costs transparently to users.

II. RBI — Frameworks

A. Payments Regulatory Board

In May-2025, RBI notified the formation of the Payments Regulatory Board (PRB) to replace the existing Board for Regulations and Supervision of Payment and Settlement Systems (BPSS) to oversee all payments and settlement systems.

In Oct-2025, RBI constituted the six member Payments Regulatory Board (PRB) that is chaired by the RBI Governor.

B. Framework for issuing regulations

In May-2025, RBI has formulated a framework for issuing new regulations/directions/guidelines, notifications and also, significant changes to draft regulations and amendments.

The framework is based on public consultation, impact analysis and periodic review of regulation.

C. FREE-AI

In Aug-2025, RBI published the Framework for Responsible and Ethical Enablement of Artificial Intelligence committee report. In short, FREE-AI

The framework is based on seven sutras (Trust in the foundation, People trust, Innovation over restraint, Fairness & equity, Accountability, Understandable by design, and Safety-Resilience-Sustainability), innovation enablers (Infrastructure, Policy, Capacity) and risk mitigators (Governance, Protection, Assurance)

D. RBI New framework for penalty

In Feb-2025, RBI announced a new framework for imposing monetary penalty and compounding of offences under the Payment and Settlement Systems Act, 2007.

The framework covers the scenarios / cases in which penalties are imposed and the quantum of penalty.

E. Measures to boost India’s banking system

In Oct-2025, RBI proposed four ground breaking measures to enhance resilience and competitiveness of India’s banking systems

• Risk based deposit insurance premium
• Expected Credit Loss (ECL) provisioning framework
• Implement revised Basel III capital adequacy norms
• Public consultation on forms of business and prudential regulation for investments

III. Fraud Prevention

A. New domains for banks

In Feb-2025, RBI introduced new internet domains, bank.in (for banks) and fin.in (for other financial institutes), to safeguard users against financial frauds. Makes sense!

As per RBI’s deadline of October-2025, banks have migrated to “.bank.in” domain.

B. Story: Curious Case of MCCs

In May-2025, RBI has started a closer check on misclassification of Merchant Category Codes (MCCs), especially the trends of classifying retail merchants under utility category. RBI intends to stop interchange arbitrage and onboarding of high risk merchants.

RBI’s move is important — it is high time to clean up this mess!

C. DOT’s FRI

As on 22-Dec-2025, 1000+ banks, TPAPs and Payment Service Providers are on-boarded on DOT’s Digital Intelligence Platform (DIP). With the Help of FRI (Financial fraud Risk Indicator) helped stop frauds worth Rs.660 Crore.

The Department of Telecommunication (DoT) has introduced the Financial Fraud Risk Indicator (FRI). Based on various inputs, DoT’s Digital Intelligence Platform (DIP) will classify the mobile number into the risk category — Medium, High, Very High. And regulated entities can use FRI to take appropriate action such as blocking the transaction or showing alerts about potential fraud merchants.

RBI has advised banks, financial institutions and other regulated entities to integrate with DOT’s FRI.

D. API Based Payout under scanner

In November, RBI has turned its focus on the API based payouts, one of complex and at times shady part of the payments ecosystem

Payout rails do solve some genuine payment related requirements but at the same time they can be used for moving funds without much oversight. So RBI has started looking closely into this and may bring some level of control/regulation around payouts.

E. API Based Payout under scanner

RBI Innovation Hub (A subsidiary of RBI) is leading the fraud fighting with its Mule Hunter and DPIP (Digital Payments Intelligence Platform).

In December-2025, RBI approved SBI and Bank of Baroda to set-up a new non-profit entity, Indian Digital Payment Intelligence Corporation (IDPIC) to work on fraud detection and prevention across public sector banks.

IV. Internationalization

A. India <> Maldives trade settlement in INR/MVR

In March-2025, RBI signed an MOU (Memorandum of Understanding) with Bank of Mauritius to promote local currencies (INR and Mauritian Rupee) for bilateral transactions.

B. Further push for promoting SRVA

RBI had introduced ‘Special Rupee Vostro Account (SRVA)’ to settle cross-border trade in Indian Rupees.

In August-2025, RBI made two significant enhancement to SRVA

• Banks can open SRVA without the approval of RBI
• The surplus amount in SRVA can be invested in Central Government Securities

In October-2025, RBI allowed surplus amount in SRVA to invest in non-convertible debentures/bonds and commercial papers issued by an Indian company

C. BRICS Payments Network

In its July-2025 summit in Brazil, BRICS countries pushed for a multilateral cross-border payment solution among BRICS countries. De-dollarization is at the heart of inter-country trade settlements to be done in local currency and not in US Dollar.

BRICS nations: Brazil, Russia, India and China and South Africa + Egypt, Ethiopia, Indonesia, Iran, Saudi Arabia, UAE and 9 partner countries (Belarus, Bolivia, Cuba, Kazakhstan, Malaysia, Nigeria, Thailand, Uganda, Uzbekistan).

IV. Fines and Penalties

In 2025, RBI levied a total of Rs.35.8048 Crore fines/penalties on 295 entities.

V. Other Updates

A. Digital Payments Index

DPI is the way to capture the extent of digitization of payments across the country. The DPI as on Mar-2025 is 493.22

B. RBI’s verified WhatsApp channel

In April-2025, RBI launched a verified WhatsApp channel to increase consumer awareness. Along with social media, mass media channels, WhatsApp will enable RBI to reach a wider consumer base and deliver messages faster. A user can scan the QR (refer to this link) and join the channel.

C. PRAVAAH Portal for all Authorization/Approvals

RBI instructed all regulated entities (banks, PSOs) to submit applications related to authorization, approval, license on PRAVAAH (Platform for Regulatory Application, Validation and Authorization) portal starting 1-May-2025.

D. RBI Recognized SRPA as SROs

In November 2025, RBI recognized SRPA (Self Regulated PSO Association) as SRO (Self Regulated Organization) of PSO (Payments System Operators).

SRPA comprises major PSOs such as Billdesk, CC Avenue, RazorPay, PhonePe, MasterCard etc.

Other RBI recognized SROs are:

• FIDC (Finance Industry Development Council) is SRO for NBFCs
• FACE (FinTech Association for Consumer Empowerment) is SRO for all types of FinTechs.

In March 2025, RBI called for applicants to form SRO for Account Aggregator (AA) ecosystem.

VI. RBI’s Payments Platforms

A. Participation of 3rd Party Apps in CBDC

After RBI allowed the participation of non-bank FinTechs in 2024, in Jan-2025, CRED and Mobikwik added support for eRupee (CBDC). More FinTechs will be part of this emerging ecosystem in 2026.

B. ‘Beneficiary Name’ look facility for RTGS and NEFT

From 1-Apr-2025, Beneficiary name view feature is rolled out for RTGS and NEFT. The feature helps the remitter to double check that he/she is sending money to the right person.

C. Increase in ATM Fees

Effective 1-May-2025, RBI increased fees for cash withdrawal (Rs.17 → Rs.19) and fees for balance enquiry (Rs.6 → Rs.7). One of the moves to reduce cash usage and boost digital payments.

D. Faster clearing of Cheques

In August 2025, RBI introduced Continuous Clearing and Settlement on Realisation in Cheque Truncation System (CTS) with the intent of reducing clearance of cheques from present T+1/T+2 days to a few hours.

The implementation would be done in two phases

• Phase 1 (4-Oct-2025 till 2-Jan-2026): Drawee cheques will be cleared by 7PM on the same day; if the drawee bank doesn’t confirm by the cut-off time then such cheques are deemed approved
• Phase 2 (from 3-Jan-2026): Drawee banks to clear the Cheques in T+2 hours (i.e. cheque that is received by drawee bank between 11AM-12PM to be cleared (approve/rejected) by 2PM.

101. 2025 Wrap — RBI Realm was originally published in Auth-n-Capture on Medium, where people are continuing the conversation by highlighting and responding to this story.

A. PA License

In 2025, 19 entities received final authorization from RBI; so far 61 entities have received PA-Online, PA-Physical and/or PA-Cross Border license.

As new Master Directions allowed authorized PA to commence a new type of PA business by intimating RBI. So many PA-Os have become PA-P and PA-CB.

• Cross-Border specialized entities that received in-principal authorization: Skydo, EximPe
• Interesting entities that received in-principal authorization: IRCTC Payments, Aditya Birla Capital Digital,
• After almost two years of embargo, PayTM received final authorization from RBI
• 29 entities waiting for PA-O license and 10 entities waiting for PA-CB license.

If 2025 is the year of license and simplified process to start new types of PA business, then 2026 will be the year of returning licenses and shutting down businesses.

B. Prepaid Payment Instrument (PPI) Licenses

In 2025, six entities received PPI license, totalling 51 PPI issuers.

The big name to receive the PPI license in 2025 is global FinTech giant, Revolut. Looks like Revolut is gearing up to participate in the UPI ecosystem with the PPI wallet.

C. Surrendering Licenses

• Feb-2025, PhonePe surrendered Account Aggregator (AA) License

III. Funding and Acquisitions

a. Major Fundings of this year:

Cashfree ($53 M), Juspay ($60M), Easebuzz ($30M), Cred ($75M at half of its previous valuation), Decentro (Rs.30 Crore), Belong ($5M), Kiwi ($25M), TransBnk ($25M), Snapmint ($125M), Dhan ($120M), Skydo ($10M), FIbe ($35M)

b. Major Acquisitions of this Year:

PayU buys 43.5% of Mindgate (UPI Infra provider), ICICI Bank sold its stake of IMSL to First Data, RazorPay acquired majority stake in POP UPI App, PhonePe acquired Gupshup’s GS Pay technology, Jio Financial Services acquired shares from SBI to fully own Jio Payments Bank.

Amazon Vs Flipkart: Flipkart received an NBFC license whereas Amazon acquired Axio. Amazon infused $30M in Amazon Pay and Flipkart pumped $30M in Super.money

c. IPO Update:

• In November, Pinelabs and Groww went IPO.
• PhonePe and RazorPay changed domicile to India and became ‘Public Limited’ — Ready for IPO

III. Payments Ecosystem

A. Juspay Vs Payment Aggregators

PhonePe, Razorpay, Cashfree, PayTM and PayU decided that they will not support merchants via Juspay’s Orchestrator.

The fragile & uncomfortable equilibrium that existed between Payment Aggregators and Juspay was shaken, and created chaos!

B. BIMA — ASBA

In Feb-2025, IRDA mandated all Life and Health Insurers to implement BIMA-ASBA (Bima application supported by Blocked Amount) where UPI One-time Mandate is used.

C. ICCL Cut off time change

Effective 23-Apr-2025, ICCL changed settlement time for Liquid Funds ( from 12:30 PM to 1PM) and for Non-Liquid Funds ( from 2PM to 2:30PM) effective from 23-Apr-2025.

If payments in other sectors is like Football or cricket then payments in Mutual Funds is like Quidditch.

D. MasterCard stopped Money Send

In June-2025, MasterCard stopped its Money Send product (used to push funds to MasterCard cards). One piece of news that nobody bothers with, including MasterCard :)

E. Gaming Ban

In August-2025, the Indian Government banned real-money games under the Promotion and Regulation of Online Gaming Bill (2025). Apart from gaming merchants, the ban impacted many PAs and FinTechs as ‘gaming’ is one of the profitable sectors.

F. Simpl Ban

In September-2025, RBI ordered Simpl, ‘Icchadhari (Shape Shifter) FinTech’, to cease all payment operations. Simpl is not a simple model, they were doing a lot of things without being authorized PA or NBFC.

G. Rent Payment stopped:

In September-2025, all major FinTechs (PhonePe, Cred, PayTM) stopped the rent payment business. Possible reasons are high frauds, no end-to-end trail of money, card to cash, lack of KYC of house owners.

H. Inter-operable Regulatory Sandbox (IoRS)

In September-2025, five regulators (RBI, SEBI, IRDAI, IFSCA, PFRDA) came up with Inter-operable Regulatory Sandbox (IoRS) that will enable FinTechs to test hybrid products that fall under different regulators.

In the IoRS model, there would be a Principal Regulator (PR) (under whom dominant feature will fall) and Associate Regulator(AR) (under whom non-dominant feature will fall).

I. Valid VPA for SEBI regulated entities

In October-2025, NPCI & SEBI rolled out standard payee VPA with verified symbol (green thumbs up) for SEBI regulated entities (stock brokers, AMCs, investment advisers etc.)

J. Global FinTech Festival — 2025

In October-2025, we witnessed GFF-2025… one of the biggest FinTech events in the world with the number of participants, booths, and footfall.

And this time, every FinTech and Payments company was dressed as an AI Company :)

100. 2025 Wrap — FinTech Realm was originally published in Auth-n-Capture on Medium, where people are continuing the conversation by highlighting and responding to this story.

A. UPI bears Visa globally and world’s largest Fast Payments Network

In July-2025, UPI (650.26 million txns per day) surpassed the global card network Visa (639 million txns per day)…. Hurray!

In Dec-2025, the IMF (International Monetary Fund) recognized UPI as the world’s largest retail fast payment network, accounting for roughly 49% of overall fast payments. Hurray!

B. UPI Sneezed, India got Cold!

In 2025, UPI fluctuated on 26th March and then went down again on 12th April.

After two major fluctuation/downtime on UPI, NPCI swung into action and issued a couple of circulars to reduce response times, limit the overuse of API calls, reduction in non-financial activities during peak hours and scrutiny of UPI Apps.

NPCI had set timelines of June and August to implement these changes.

C. Hope of MDR on UPI and disappointment

Since Feb-2025, the payments industry has been speculating about the return of MDR on UPI.

Many thought that the union budget announcement of reduction in subsidy (from Rs.1500 Cr of FY25 to Rs.437 Cr for FY26) on UPI/RuPay is the clue that UPI will have MDR soon.

Payments Council of India (PCI) wrote a letter to the Prime Minister seeking MDR on UPI.

And then June-2025, The Ministry of Finance announced that UPI will continue to be free.

For FY 2024–25, NPCI’s operating income increased by 18.95% (from Rs.2,749 Crore of FY ’24 to Rs.3,270 Crore) and surplus after tax increased by 41.73% (from Rs.1095 Crore of FY’24 to Rs.1,552 crore).

Banks or PAs cannot earn MDR (officially) on UPI but NPCI earns a switching fee. Interesting… isn’t it?

As they say, ‘The House Always Wins’!

D. NPCI’s new subsidiary

In Oct-2025, NPCI formed its 4th subsidiary, NPCI Tech Solutions Ltd (NTSL).

NPCI mothership will continue to drive UPI, RuPay and other payments platforms, subsidiaries will focus on certain platforms/markets.

1. NPCI International Payments Ltd (NIPL) — For internationalization of UPI and RuPay
2. NPCI Bharat BillPay Ltd (NBBL) — Manages Bharat Connect/BBPS and Banking Connect/IBMB
3. NPCI BHIM Services Ltd (NBSL) — To make the BHIM UPI App great again
4. NPCI Tech Solutions Ltd (NTSL) — to foster FinTech innovation

E. UPI Tax

In July 2025, shops in Bangalore started receiving GST notices based on their UPI collections.

Newspapers started calling it ‘UPI Tax’.

Many small shops stopped accepting UPI and then went on strike to protest against GST notices. Eventually things settled down and shops are back on the UPI network.

For a moment it looked like a challenger had emerged for UPI… that is UPI.

F. UPI Apps — Too big to fail and 30% Capping

2025 started with good news for PhonePe and Google Pay (together have 80–85% marketshare) as NPCI extended the deadline for 30% capping on TPAP to 31st Dec 2026.

In the light of the Indigo fiasco, the topic of too big to fail surfaced again in December. But everyone knows it is not practical to implement 30% capping.

Although WhatsApp is allowed to onboard all its users on WhatsApp Pay (earlier capping of 100Million was removed), NBSL (a subsidiary of NPCI) launched BHIM 3.0 (again… may be third time’s the Charm) and Flipkart’s Super.Money continue to throw money to acquire new users but still the PhonePe and Google Pay continue to dominate the UPI space.

Let’s see how this will play out in 2026.

II. UPI — Features

A. Employment Provident Fund (EPF) withdrawal from UPI

In March-2025, EPFO (Employment Provident Fund Organization) intends to provide a facility for users to withdraw EPF amounts via UPI to their bank accounts.

B. Biometric Authentication for UPI

In Oct-2025, NPCI introduced additional authentication methods apart from existing methods.

NPCI is allowing UIDAI face authentication and Aadhar OTP for UPI PIN set/reset, and on-device biometric authentication for transaction amount of up to Rs.5000 (in the initial phase)

C. UPI Help!

In Oct-2025, NPCI introduced UPI HELP! to provide intelligent conversational support to respond to queries, redressal of grievances and help manage the mandates. NPCI intends to add other services and support in regional languages.

D. Cash withdrawal at Micro ATMs

In Oct-2025, NPCI allowed cash withdrawal through Micro ATMs at Business Correspondent touchpoints via UPI. A user can scan the dynamic UPI QR displayed by the BC and transact using any UPI App.

F. UPI on IoT devices via UPI Circle (Delegated) Payments

In Oct-2025, UPI Circle (Delegated Payments) is extended to IoT devices where in these devices such as Agentic AI, Alexa or TV etc will be a secondary user and can make payments with authorization from the primary user.

G. SBMD → UPI Reserve Pay

In Oct-2025, NPCI renamed UPI Single Block Multi Debit (SBMD) as ‘UPI Reserve Pay’.

A user can set UPI Reserve Pay mandate on Savings account, current account, overdraft account, RuPay Credit Card, and pre-approved credit line for an amount up to Rs. 10,000 for 90 days.

H. Porting of UPI AutoPay Mandates

In Oct-2025, NPCI announced interoperability to the UPI Autopay by 1-Jan-2026.

The interoperability framework will allow users to ‘port mandate’ from one UPI App/TPAP to the other TPAP once in 90 days rolling period.

III. UPI Limits Enhanced

A. UPI Lite limits enhanced

In March — 2025, UPI Lite wallet’s transaction limit increased to Rs.1000 (from Rs.500) and wallet balance limit is increased to Rs.5000 (from Rs.2000)

B. UPI Limit enhancement decision moved to with NPCI

In April-2025, RBI gave freedom to NPCI to enhance the UPI limits and at the same time, gave freedom to banks to add their own limits (<= NPCI’s limit).

C. UPI Limits enhanced for P2M verified merchants on 15-Sep-2025

• Capital markets, insurance, Govt e-Marketplace, Collection, Travel, Credit card Bill Payment, Business/merchant (pre-approved), FX Retail, Term Deposit — Rs.5Lakh
• Jewellery and Initial deposit for account opening — Rs. 2 Lakh

IV. UPI’s domestic Expansion

A. UPI ecosystem expanded to Co-operative Banks

In Jan-2025, Co-operative Banks that are directly allowed to be part of UPI Ecosystem can participate in UPI merchant Acquiring business.

B. PPI wallet is supported on 3rd Party Apps

In Jan-2025, a Full KYCed PPI wallet can be linked to any 3rd party UPI Apps/TPAPs (Amazon Wallet <> PhonePe).

[Earlier the wallet could be linked to only wallet provider’s PPI (Amazon wallet <> Amazon UPI App)]

C. Participation of SFBs in UPI linked to Credit Line

In Feb-2025, NPCI allowed pre-approved credit lines of the Small Finance Bank (SFB) to be linked to UPI.

(Earlier only the scheduled commercial banks were allowed to participate)

F. UPI + Multi signatory accounts

In Oct-2025, NPCI allowed linking of UPI to multi-signatory accounts (current accounts or joint accounts)

(Types of accounts supported earlier: savings account, OD account, NRE account).

V. UPI’s Internationalization

A. UPI Acceptance abroad

This year, UPI expanded its footprint abroad

• UAE — partnership with Magnati to accept UPI in Dubai Duty Free shops (Jan)
• Singapore — Partnered with HitPay to enable UPI acceptance across 12,000 merchants (March)
• Trinidad and Tobago — NIPL announced entry of UPI into first Caribbean nation (July)
• Qatar — UPI will be accepted in Doha Airport’s Duty Free shops (Oct)
• Japan — NIPL and NTT Data signed a MOU for enabling UPI (Oct)
• Peru — NIPL will support Peru to build its own UPI type of RTP (Nov)
• Cambodia — Indian tourists can make UPI payments on Cambodia’s national QR — KHQR (Dec)

With this, UPI will be available in 9 countries (France, Singapore, Bhutan, Nepal, Sri Lanka, Mauritius, UAE, Qatar, Cambodia) and soon will be available in 2 more countries (Japan, Trinidad and Tobago).

B. UPI and other RTP Linking

• In April-2025, Nexus Global Payments (NGP), managing body of Project Nexus, was incorporated as a Non-Profit Organization.

Project Nexus is interlinking of Real Time Payments rails of 5 countries: India (UPI) <> Malaysia (DuitNow) <> Thailand (PromptPay) <> Singapore (PayNow) <> Philippines (InstaPay)

• In Nov-2025, NIPL announced UPI integration with the European Central Bank’s TIPS (TARGET Instant Payment Settlement System) and Bahrain’s Fawri+

C. Indian Post and Inward Remittance

In July-2025, NIPL (NPCI International Payments Ltd) signed an MOU with Indian Post for inward remittance to India. The system will work on UPI and Universal Postal Union (UPU) Interconnection Platform (IP) to enable seamless, cost efficient and real-time inward remittance to India.

D. UPI on PayPal World

In August-2025, Payments giant announced an ambitious product, “PayPal Word”.

With strategic partnerships with the world’s largest payment platform and wallets to connect various wallets and RTPs across the world to provide solutions for consumers to make international payments.

PayPal World’s partnerships: UPI (India), Venmo (USA), Mercado Pago (Brazil), Tenpay Global (China)

VI. UPI — Operations

A. To make the chargeback management efficient, NPCI is implemented

• Auto Acceptance/rejection of chargeback basis TCC /RET raised by the beneficiary bank <Feb>
• Exempting capping of chargeback raised on fraudulent transactions <March>

B. More procedures on UPI Number Mapper

In March-2025, NPCI mandated all banks/TPAPs to check mobile numbers against Mobile Number Revocation List (MNRL)/Digital Intelligence Platform (DIP) on a weekly basis.

Also, TPAPs are mandated to get explicit consent from users and to provide ‘opt-out’ or porting of UPI Number. And all PSPs to report monthly data to NPCI

C. UPI Lite

By 30-Jun-2025, all UPI Apps/ TPAPs are to provide the transfer out function to withdraw UPI Lite wallet balance amount to source account without disabling UPI Lite wallet, and refund balance amount of wallets that are not active for six months.

VII. UPI — Fighting Frauds

A. Blocked QR Share & Pay for UPI Global P2M

In April, NPCI blocked all QR Share & Pay for all UPI Global P2M transactions; this to safeguard the users.

B. Beneficiary Name verification and Display

NPCI has mandated UPI Apps to implement display of ultimate beneficiary name for P2M and P2PM payments and disable any feature that allows users to change beneficiary name by 30-June-2025.

C. Stopping UPI P2P Pull payments

NPCI stopped the pull (collect Request) payments for P2P (Person 2 Person) cases by 1-Oct-2025.

VIII. NPCI’s Other Products

A. FasTag black listing and penalty

In Feb-2025, NPCI brought new rules for FasTag

• A user should recharge FasTag at least 60 mins before or 10 mins after crossing the toll.
• Users who do not have minimum balance (=>Rs.100) and do KYC will be blacklisted

B. NACH

• By 28-Feb-2025, NPCI mandated all participating banks to provide online Cancel / Amend / Suspend & Revoke functionality, and banks, PA and merchants to show all destination banks without any exclusion.
• In June 2025, NPCI gave a facelift to the NACH platform (NACH 3.0). The upgrade is mainly to provide enhanced experience and security systems that are used by NACH participant banks.

C. BBPS — PA + COU combo

In Aug-2025, NBBL issued notice based on RBI’s guidelines: Agent Institutes to route BBPS transactions through COU and the same COU should act as the Payment Aggregator to process the customer transactions by 30-June-2026

This PA + COU combo is to stop the fragmentation in transaction flow.

D. Banking Connect — Interoperable Mobile and Net-Banking

In Oct-2025, NBBL (NPCI’s subsidiary) launched Banking Connect (Interoperable Mobile and Net-Banking) to replace existing legacy net-banking flow. The product is in the closed user group phase and may take a long time to mature!

99. 2025 Wrap — NPCI Realm was originally published in Auth-n-Capture on Medium, where people are continuing the conversation by highlighting and responding to this story.

On 15-Sep-2025, RBI published Master Direction on Regulation of Payment Aggregator (PA).

In every sense, this is the ‘Master’ Direction because going forward it will direct all types of PAs.

“One Master Direction to rule them (PAs) all and one Master Directions to bind them”

Long… long… journey of PA

PAs have existed since the early 2000s and in the last 25 years, various guidelines, circulars and directions were framed that PAs followed or didn’t bother to follow. Kind of No Asker and No Teller.

In 2020, RBI issued the PA/PG guidelines of 2020, that mandated the authorization of online PAs. In 2023, we got PA-Cross Border guidelines, and in 2024, Master Direction for BBPS.

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And now, Master Direction on Regulation of Payment Aggregator (PA), in short MD — RoPA :)

While all this was happening PAs were going through their own journey… Many erstwhile PAs pulled out the application, many were rejected and only in Jun-22 (year or so after submitting application), first set of PAs received in-principle authorization. Only in Dec-2022, the first set of PAs received final authorization. And the first PA-Cross Border came in July-2024.

This Master Direction will repeal many of the earlier guidelines but the authorizations/approvals, actions taken and acknowledgements issued under those circulars/directions will remain valid.

E.g. If PA-CB has received authorization under PA-CB guideline, it will continue to be authorized although the PA-CB guideline is repealed. And the PA-CB has to follow the new Master Directions.

Type of PAs covered:

Definition of PA: Entity that that collects from customers and settles to merchants:

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Authorization and Approval:

MD is making the it easier for an authorized PA to get into another type PA business with 30 days commencement notice to RBI via Pravaah portal

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Overall approval, commencement process for PAs and BBPOUs

General:

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Merchant KYC and Due Diligence

Much clarity about the KYC and Due diligence process; PA’s to start following the process from 1-Jan-2026. And merchants onboarded till then should be re-onboarded as per the new process by 15-Sep-2026.

Although MD of PA and MD — KYC are the same for all PAs, each PA has a different KYC process. Reason: Interpretation of guidelines, and risk taking nature.

So KYC is one of the challenging barriers for PAs who want to be highly disciplined and compliant, compared to the ones who like speed, operate in grey areas and take risks.

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Fully mature CKYC (when all merchants come onboard) will bring the uniformity, speed and high compliance that industry needs.

Escrow Set-up:

Each type of PAs are expected to move the funds via special accounts within permissible debits and credits.

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PAs to operate the Escrow / InCA / OCA accounts within permissible debits and credits

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Other points from Escrow

• Share list of merchants onboarded on escrow with the bank
• Do not mingle funds of OCA/InCA with domestic Escrow
• Escrow a/c can be shifted to another bank without impacting merchant’s settlement, under the advice of RBI
• Refunds to be processed via Escrow unless merchant, with customer’s consent’ refunds to customer through another channel. (Caution: Customer’s chargeback rights remain unaffected)

PA-CB Specific:

Firstly, thank you RBI for simplifying the names.

It was always confusing to use the PA-CB-Export and Import.

Export there goods/service goes outside India and money comes to India; and in Import, goods / service come to India and money goes abroad.

Life is simple with Outward / Inward transaction (i.e. money goes out or comes in)

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Interesting fund movement:

A PA-CB-Outward will have two legs:

1. Domestic: PA-O will process payments (UPI, Card etc.) and receive funds in PA-O escrow, and then transfer funds to PA-CB-Outward’s InCA account
2. International Leg: PA-CB-Outward will remit funds to merchant abroad

Interestingly, MD allows skipping of PA-O’s escrow and directly funds can be credited to InCA

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Note: I presume Flow 2 (Skip Flow) is possible only if PA and PA-CB are the same and the acquirer bank will agree to directly settle to the InCA. Anyway banks will tie this in a nice little bow by pushing PA to take their acquiring and InCA account.

PA behind PA

RBI explicitly allowed partnership between two PAs to facilitate payments.

PA behind PA can be done for domestic PA (both online and offline) and for PA-CB Outward.

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Today domestic PAs use another PA for payment modes that they do not have (as it takes time to do integration, agreement etc.) but wants to offer those payment modes to merchants.

Net-banking (until IBMB/Banking Connect goes live fully), wallets and EMIs are the popular payment modes where two PAs work with each other but even cards and UPI can be enabled under PA behind PA arrangement.

Although any PA can get into any other PA business (e.g. PA-O can become PA-CB). But few PA-Os may not want to be PA-CB and vice versa. In such cases, PA-O and PA-CB can work together where PA-CB will do merchant onboarding/DD/KYC and do settlement and PA-O will process the domestic leg of transaction (e.g. UPI, Card, NB etc.)

Interesting, PA-O and PA-CB-Outward can have two types of funds flows

Base Line Technology

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Along with the above recommendations, PAs to follow Master Direction on Cyber Resilience and DPSC, vendor outsourcing, MD-KYC.

And then there are a series of audits, testing and reporting — Big ones among them would be yearly PA System Audit and PCI-DSS.

Reports:

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Closing Remarks:

MD gave a lot of clarity to PAs, but still there are many questions and there are many things subject to interpretation. I am sure in the coming days/weeks all those will be plugged in and I will update this article accordingly.

98. MASTER Direction — PA was originally published in Auth-n-Capture on Medium, where people are continuing the conversation by highlighting and responding to this story.

These two pyramids were built by two civilizations which were continents apart and without any contact with each other. How?

Maybe ancient aliens or ‘Atlantians’ taught them!

Or a simple explanation is that layering stones is the easiest way to build a tall building.

Not just Pyramids, throughout the history of the human race, many inventions happened in different parts of the world by people who are not connected.

Examples: Agriculture, fire, wheel.

And of course, the money (the concept of ‘money’)

Money was created many times in many places. Its development required no technological breakthroughs — it was purely a mental revolution. It involved the creation of a new inter-subjective reality that exists solely in people’s shared imagination. — Yuval Noah Harari

Then Money as a concept evolved… from barter to gold/silver to coins to notes. While the ‘money’ was being shaped/perceived differently by different countries/cultures, we came up with ‘digital money’ along with financial institutes, payment instruments, and payment infrastructure to move that digital money from point A to point B.

Today we have hundreds and thousands of payment instruments that come in various shapes and forms. Let’s look at a few popular payment methods.

I have covered these payment modes in detail in Chapter 25 of my book AUTH N CAPTURE (Revised Edition)

Here is a super compressed summary of the Payment Instrument Landscape of the World.

A. Cards

Throughout the world, cards (credit, debit, prepaid) are the prominent payment instruments.

These cards can be used for online and offline payments, and cash withdrawal at ATMs.

Cards are issued by card issuing entities (bank and non-bank entities), and the card networks provide infrastructure, processes, platforms, and frameworks for issuance, acceptance, fund movement, and dispute management.

Global Card network: Visa and MasterCard are the world’s largest card networks, and then there are other global card networks such as American Express, Diners and Discover (all are from USA).

JCB (Japan Credit Bureau) is one of the first card networks that originated from Japan, and then was spread to many countries. Then came the dragon (China) with its Union Pay card network.

Domestic Card Networks: In the last couple of decades, many countries have launched their own domestic card networks and the reasons for that are:

Today there are 30+ countries with thriving domestic card networks.

Domestic card networks which were started to cater to the domestic market and, eventually, expanded / intend to expand to other territories.

The card network can do this expansion on their own (like Visa, MasterCard, or Union Pay) or partner with other country’s domestic card networks or global card networks.

Note: Partner card network’s logo(s) will be on the back of the card.

Example: RuPay <> JCB partnership cards, card is accepted on RuPay and JCB networks

B. Real-Time Payment (RTP) Rails

RTPs are known by different names — Fast Payments, A2A payments, instant payments etc.

RTPs are designed to cater both P2P and P2M (in store as well as online) payment use cases with capabilities of (near) real-time payments, and such payments should be economical (acceptance infra and processing cost).

Above diagram is the simplest schematic of a RTP system. And yet, each RTP rail works differently in terms of transaction processing, settlement time, clearing process, dispute management.

Many countries want to achieve different objectives with the RTP rails.

List of countries that have Real-Time Payment Rails:

Geo Expansion: RTPs are not stopping at domestic level and are expanding their horizon by unlocking interesting cross-border remittance use cases.

C. CBDCs

CBDC (Central Bank Digital Currency) is a legal tender issued by the central bank of a country in a digital form. It is the same as sovereign currency and is exchangeable 1:1 with fiat currency.

Different countries have different reasons/motives to launch CBDC.

We have three types of money: Cash, Digital Money (which is in our bank accounts) and CBDC.

• CBDC is different from the cash and digital money as CBDC is the liability of the central bank whereas other types of monies are liabilities of banks
• CBDC is similar to cash (fungible, non-interest earning) but yet different (form factor). CBDC and Digital money are the same (digital form) but they are different (interest earning and fungibility)
• Common thing among the three are that they can be exchanged at 1:1:1

CBDC — possible types:

100+ countries are researching, piloting, and launching CBDCs.

However, not all countries are equally enthusiastic about CBDC — Few countries are interested in either retail or wholesale CBDCs, whereas few are interested in both types of CBDCs. Few countries are working on domestic CBDC whereas few are focusing on cross-border use cases.

Few countries which have shutdown/canceled or inactive CBDC programs for various reasons (lack of adoption, no real need, political crisis, economic conditions, wait & watch, etc.)

Few cross-border Projects:

Cross-border remittance/payments is one of the biggest use cases of CBDCs. And there are quite a few countries that are working on these cross-border projects.

The world is in the early stages of CBDC as nations are figuring out many things, such as utility, risks, operationalization, adoption, resources, etc.

This is a ‘new money’ and it is expected to redefine how we use the money. So definitely there are challenges, but it will also be equally exciting!

D. Cryptocurrencies

On 31st Oct 2008, a mysterious person named Satoshi Nakamoto published a whitepaper on Bitcoin which gave birth to Crypto currencies, and now we have thousands of them.

Cryptocurrencies are not created by the government/central bank but are ‘mined’ (tokens are awarded for the fastest nodes that verify crypto transactions added to the blockchain) and ledger of tokens is maintained by all nodes (i.e. distributed ledger).

Although the name itself carries ‘currency’ in it, the majority of people are interested in cryptocurrencies not because of its utility but ‘get rich method’. That is the reason, most of the countries have classified cryptocurrencies as Virtual/Digital Assets (if not banned them).

Cryptocurrencies are too volatile to be used for payments. Thus, stable coins were designed which are pegged to a US Dollar (or any other fiat currency)

Popular stablecoins: USDC, USDT, Athena USDe etc.

Although stable coin based payments are cheaper, faster and easier, they haven’t made a significant impact on the payments landscape mainly because ‘they are cryptocurrencies’. :)

Many people believe cryptocurrencies are the future of payments… Why shouldn’t they? Modern finance and our credit system is based on ‘belief’… think about it!

E. Convenient Store Payments:

Here, we are talking about a unique (at least for Indians) payment method where cash is used for online payments… not directly, but indirectly.

Convenience stores are quite common in many countries. These are small outlets/stores that are operated by an entity (7 Eleven, Lawsons etc.).

These convenience stores act as a channel of cash to online payments.

Although the modus operandi may vary a bit here and there, this is how ‘convenient store based payments’ work.

Convenient stores charge a fee to the merchants for facilitating payment service.

Countries where convenience store payments are popular:

Convenience store-based payments are popular across the globe in both developed as well as developing countries, particularly popular in Southeast Asia and South America.

These convenience stores play an important role as they allow users to be part of the digital commerce even if they do not have the required device (e.g. smartphones), payment instruments (e.g. bank account or cards), or merchant restrictions (do not allow Cash On Delivery orders).

F. Mobile Wallets:

Mobile Wallets are prepaid payment instruments where users will load the funds and utilize the funds for payments at shops or online merchants. Wallet is a simple payment instrument — that involves a wallet-issuing entity that has to bring customers and build acceptance networks.

Wallets have certain guidelines, such as license to operate a wallet, limit on balance amount, loading channels, acceptance network, withdrawal limits, acceptance in other countries etc.

Advantages of wallets:

Wallets are largely successful in solving many of the payments-related challenges of a user and/or merchant.

Countries and Popular Wallets.

The majority of wallet operators work in their domestic market, but there are few wallets which operate in multiple countries.

Payment Containers: Users can add their cards, wallets, and BNPL accounts, and pay using any of those payment modes.

Examples: Apple Pay, Google Pay, PayPal, MasterPass

Usually these payment containers are also classified under ‘wallets’ but actually they are not.

Mobile wallets may be struggling in a few countries due to the rise of RTPs (e.g., India, Singapore, or Brazil), but in the global context, wallets are thriving and continue to do so.

G. BNPLs:

BNPLs are quite new to the payments landscape.

The basics of BNPL remains same,

• Give small credit to the user
• Provide acceptance infrastructure to spend that credit
• Customers will repay the utilized credit amount

This sounds simple… the challenges of customer acquisition, building a large acceptance network, cost of capital, and non-performing assets are the same across the globe.

Various types of entities offering/offered BNPL products — Banks, NBFCs, FinTechs (e.g. Klarna) and even big brands (e.g. Apple Pay Later). BNPL companies started in the online commerce space but have created a presence in offline models as well. Many BNPLs (e.g., Klarna) are accepted in physical stores as well.

Here is the list of popular BNPLs:

Few BNPLs have expanded to multiple countries:

Last couple years, many global BNPL companies have lost their ‘shine’ (in other words: Valuation).

So, has the BNPL model hit the dead end of the road? Or will the models shift from a FinTech-led model to a consumer brand-led model? Or will the BNPLs move to an ‘installment’ model?

H. Other Payment Modes

I am listing few other popular payment modes:

• Carrier Billing: In this payment mode, the user can use a prepaid amount balance to purchase the product, or the product purchase amount will be added to postpaid bill. Carrier billing is an ideal solution for low ticket transactions.

Major players: Mobiamo, Softbank, Dao Pay, Siru Mobile

• Bank Transfer:
• Direct bank transfer to business or person (similar to NEFT, RTGS)
• Banking platform — similar to our net-banking; usually referred to as EFT (Electronic Fund Transfer)
• Virtual Account based solution where each user/entity receives a unique account number that is created on a pool account and the user can transfer funds to that assigned account. This will help in easier reconciliation.

I. Cash

I am keeping the best one for the last!

Cash is universal — our world has 180+ currencies that can be used for purchases or exchange.

Cash is the most widely used and popular payment instrument because it is simple, easy to understand, and widely accepted.

Cash usage depends not only on the maturity level of a country’s payment infrastructure but also on the way money is perceived in that country.

• Austrians and Dutch people associate cash with privacy (they don’t like to be forced to use digital payments)
• Sweden and Norway are encouraging citizens to keep cash in the perceived threat of future war in Europe [Link]
• We, Indians, love cash — big we are not only big in UPI but also in corruption so cash is easier to hide from taxmen and authorities

Currency acceptance:

Since the end of World War II, the US Dollar ($) has been the dominant currency, and countries keep USD reserves to purchase commodities (e.g., crude oil).

Few countries are pushing their own currencies as global currencies, e.g., Russian Ruble, the Chinese Yuan, and the Euro. Recently, India has also been trying to push the Indian Rupee for trade settlement.

Closing Remarks

“You can’t be a real country unless you have a beer and an airline — it helps if you have some kind of football team, or some nuclear weapons, but at the very least you need a beer.”

- Frank Zappa (American Music Composer)

A payment professional would have quoted — “You can’t be a real country unless you have Real Time Payment (RTP) rail and domestic card network — it helps if you have some kind of CBDC or mobile wallet, but at the very least you need an RTP rail”.

The world payments landscape is extremely diverse, interesting, and evolving. We are witnessing the rise of Real-Time Payment (RTP)/A2A rails, domestic card networks, and the world is excited about the potential of CBDCs. There are wallets and BNPLs, and few countries have retail chains to make online payments, and of course, the king of all, Cash.

Countries are building digital payment infrastructure for domestic usage and also for cross-border payments.

In this connected world where trade, commerce, and travel are happening at a global level, countries want to provide free movement and seamless cross-border payments for their citizens and businesses.

At the same time, the country wants to safeguard its citizens’ data and protect its sovereign interests (by promoting its own payment infra, card network etc.). Also, the country wants other countries to use its payment infrastructure or currency.

It would be interesting to see how a country will balance between nationalization and globalization at the same time, and how these ‘moves’ will be perceived by other countries.

Money is the most universal and most efficient system of mutual trust ever devised. — Yual Noah Harari

97. Payments World — super compressed was originally published in Auth-n-Capture on Medium, where people are continuing the conversation by highlighting and responding to this story.

I thought let’s keep it simple and show you UPI’s journey so far (Apr’16 till Dec’24).

UPI is omnipotent and omnipresent… comes in various shapes and forms that offers various functionalities.

UPI has evolved over the period… Multiple regulations, hundreds of circulars and many innovations shaped (continue to shape UPI).

Here is the journey of UPI through those NPCI circulars and key events.

Here is how UPI AutoPay is evolved:

UPI had amazing journey so far and it will continue to have wonderful 2025… astronomical growth, UPI meta protocol, participation of Co-operative banks in merchant acquiring, and of course, UPI may spread to more countries.

May be this year, every FinTech/PA/Banks’ secret wish may come true… i.e. MDR on UPI (linked to bank a/c) :)

There are various sources that one can refer to learn about payment — observation, experience, my blog and the book, API documentation of good Payment companies, LinkedIn posts (be careful what you consume) but the most important ones are Circulars, Guidelines, and Notifications issued by card networks, NPCI and RBI. They may be bit boring with heavy duty english, but irrespective of your role (sales, product, dev), you should read these.

96. UPI Journey (till 2024) was originally published in Auth-n-Capture on Medium, where people are continuing the conversation by highlighting and responding to this story.

2024 is a leap year. So, we worked one extra day without extra salary 🙁

I had a reasonably good year — worked on a white-label solution of India’s biggest private sector bank, operationalised the PA license for the company, and published the revised edition of ‘AUTH N CAPTURE’ book. [And a lot of personal stories, experiences and memories]

For the payments space, it was just another year — few regulations, few bans/embargoes, few new products/features and full of actions.

So let’s wrap the year up with big and little things.

I. PA License

1. After 2 years of waiting, RBI started issuing PA licenses in Dec ’23 and it continued in 2024. And so far 42 entities have received authorisation.
2. PA-Cross Border guidelines were announced in Nov ’23, and so far 4 entities received authorisation. [Reference article on PA-CB: Here]
3. BBPS Master Direction of Feb ’24, allowed a licensed Online PA to operate as BBPO (BOU and/or COU). [Details in this article]
4. In the draft circular, RBI mentioned about regulating Offline PAs (PA-P).

Big picture of PA, PA-CB, BBPOU and PA-P.

In a nutshell, PA-Online is the second most powerful license after banking license.

GST Clarity: PAs are exempted from GST on transaction amount up to Rs.2000 on all types of cards. So finally, it is clear. PAs are treated as acquiring banks in this context and get the above exemption. Hurray!

The exemption is not for PGs (who processes transactions but not involved in fund movement).

More is not merrier: There will be 60–70 PAs — few big, few new and few clueless. Although ‘the digital payments pie is big’, is it big enough for all these players to make a healthy margin especially when UPI is at Zero MDR (technically)?

It will be interesting to see how this will play out in the next couple of years. [Read this article]

Wish: Although there is a hint about bringing back MDR on UPI linked to bank a/c for large merchants. [Note: Already there is MDR on UPI linked to credit card, PPI and Credit line].

PAs have been hoping for this for years and it hasn’t happened yet. So something to look forward to in 2025!

II. NPCI and subsidiaries:

In 2024, NPCI floated a new subsidiary, BHIM Services Pvt. Ltd. (BSPL).

With this development, NPCI group has 3 subsidiaries.

A. NPCI:

The mothership is busy with shaping the payments landscape with many avatars of UPI and other products such as FASTag, IMPS, NACH, CTS, AePS etc.

B. NBBL:

• NBBL is incharge of building an Interoperable Net-banking platform that was announced by RBI in Feb ‘2024. This may take some time and will impact participants in both positive and negative ways (this article). Irrespective, more switching fee for NBBL 🙂
• Bharat BillPay is renamed as Bharat Connect — this platform will go beyond bill payments — B2B payments, rent payments, FX-Retail platform linking and what not.

NBBL had a great year, especially after the RBI mandated that all credit card bill repayment should go via BBPS and not via 3rd Party FinTechs (Read this article)

C. NIPL:

• Busy with expanding UPI and RuPay to other countries
• Forging strategic partnership for global expansion (e.g., with Google Pay)
• After the launch of UPI <> Singapore’s PayNow linking, NIPL is working on linking UPI and RTP (A2A) rails of other countries.

D. BSPL:

The objective of this subsidiary is to make BHIM App great again and reduce the dominance of PhonePe and Google Pay (who have 80–85% market share).

NPCI wanted 30% capping on a single TPAP, and gave multiple deadlines (the recent one ends in Dec 2024).

But NPCI cannot enforce it because it is not practical. So, NPCI tried various ways:

• UPI Plug-in: A light-TPAP kind of set-up (read here). Didn’t work much!
• Made BHIM App source code ‘Open’ for any bank or TPAPs to use
• Approved more TPAPs (~50 TPAPs will be out soon). But the TPAP game is very difficult for late entrants with zero fees on UPI, big CAC and cut throat competition.

Thus, the OG of UPI Apps, BHIM is back.

BHIM will have backing of mothership, NPCI (by extension RBI, and GoI), and BHIM will play the game of cashbacks (Not sure if it is our tax money).

I don’t think BHIM is here just to reduce the dominance of other TPAPs. I am sure BHIM will morph into COU and BOU (to reduce dominance of BillDesk, PhonePe etc. in the BBPS ecosystem), and may get into Payment Aggregation (offline and/or online).

“In for penny, in for pound”

III. RBI — Notifications, Circulars, Master Directions

Another busy year for RBI… Full of regulations, stopping ‘grey area’ business model, penalties, embargoes etc.

Here are few important Master Directions, circulars and notifications (detailed list is here)

IV. Card Networks

Visa and MasterCard are having their own roller coaster ride in India.

Reference articles: BPSP, Push Provisioning & Guest Checkout

UPI is the dominant payment mode liked by merchants and customers, Visa & MasterCard are liked by few entities/actors in the payment ecosystem — customers (EMIs, International payments, reward points), banks (interchange revenue), and PAs (MDR and higher MDR on EMIs & Intl cards).

If ever you feel that things are not going well and everything is stacking up against you, then just look at these two card networks… they will surely inspire you. :)

V. Other Updates:

A. CBDC:

eRupee is trying to get its foothold in the retail side [articles: CBDC, eRupee]

After trying its own QR (which didn’t fly), CBDC is now accepted by UPI QR.

Now, CBDC wants to replicate the success of UPI, by allowing third party Apps to participate. Soon, CRED, PhonePe etc. will support CBDC payments.

Retail eRupee is a bit confusing (too many money types). But wholesale eRupee has few good use cases (e.g. settlement between issuing banks and acquiring banks, and settlement to merchants CBDC wallet). Quite possible.

B. UPI:

UPI has become bigger than it was last year, last month and even yesterday.

• UPI Circle (Delegate payments): A UPI user can add secondary user and give full or partial access to secondary user to make payments (use case: Mother adding son)
• EMI on Credit Card linked to UPI
• Limits got updated: (1) Hospital, Education, Investment and Tax payment to Rs.5,00,000 (2) UPI 123 Pay (Offline payment) transaction limit increased from Rs.5K to Rs.10K (3) UPI Lite limit increase (Rs.500 to Rs.1K per transaction, and daily limit from Rs.2K to Rs.5K)
• UPI based cash deposit is ATM without debit card
• RBI allowed Small Finance Banks (SFBs) to be part of UPI linked to the Credit Line.

NPCI warned FinTechs not to use the ‘Verify UPI ID’ API to check user’s name. FinTechs were selling these solutions to merchants as part of the validation/verification suite. Verifying UPI ID is part of UPI payments (collect flow) and should not be used independently.

Using the verify UPI Id API is a clever hack. That reminds me of Reynold’s pen… The cap has another utility (i.e. cleaning the ear), but that is not the purpose of it. (I am sure 80s-90s kids can related to it) 🙂

C. IMPS:

One can transfer funds via IMPS by entering mobile number + bank name. (you can read and forget about it as you will never be using it :))

As of today, IMPS supports account number+IFSC and mobile number+MMID combination, very soon, one can transfer money to mobile number + Bank name combination.

This is to simplify IMPS fund transfer… But why? Don’t we have UPI for that?

Talking of fund transfer rails, RTGS and NEFT will have beneficiary name verification, just like UPI and IMPS.

VI. Security:

There was a cyber attack on NPCI that impacted rural banks.

This is serious!

Digital payments have become core to our lives.

And can be potential targets for ‘bad actors’. (It happened in Israel — Read this article]

That is why the Ministry of Electronics and IT (MeitY) has declared many financial institutes such as RBI, NPCI, LIC and major banks as Critical Information Infrastructure (CII). NCIIPC is nodal agency responsible for taking measures to protect the nation’s CIIs

VII. Frauds:

You may be wondering what the right side number is? Will come to that in a bit.

In 2024, we witnessed elaborate frauds and scams which made the Nigerian Prince scam look like a kindergarten project.

Fake courts, fake police stations, digital arrests, scraping fingerprints, and even a fake SBI branch… fraudsters are all over the place.

I am sure you are also receiving calls about SIM blocking, FedEx courier, dark web activity, get rich schemes etc.

RBI to banks to payment companies are trying to tackle this menace. We did talk about the various policies, products, processes etc. that are in place to tackle this in the article, ‘Dark side of Digital payments’.

But it looks like someone is not doing the ‘right thing’… otherwise, how else fraudsters are getting access to bank accounts, UPI rails etc.

Irrespective, people will continue to fall into this trap because of Greed, Ignorance or Fear.

Now, the right side number… Any guesses?

It is the total amount of cash and goods seized during the General Election of 2024. (Report)

We can guess that this amount is a small fraction of the amount that is actually distributed.

Think about it, the people who are ruling us and who want to rule us are doing it. Bravo!

Then there is the third number…. which is the total amount of corruption that happens in Government offices. I bet those will be staggering!

If bribe money can go through UPI, then definitely UPI will hit 2–3 billion transactions per day easily. Vision Achieved!

On a serious note, UPI is not suitable for bribe collection… It has a limit of Rs. 1 Lakh :)

On a more serious note, remember a payment at a tea shop goes through more checks than in cases done by the ruling class.

Ironic isn’t it?

VIII. Awareness

Let’s talk about normal fraudsters… Banks, NPCI and RBI have increased their effort in creating awareness.

Every entity is running various kinds of awareness campaigns: Amitabh Bachchan, RK Laxman’s Common Man, HDFC’s Vigil Aunty (so on)

In the recent ad series, Kaleen Bhaiyya (Pankaj Tripathi) is teaching you to say “I am not a fool” in various Indian languages when fraudsters call you about your mobile SIM being blocked, lottery winnings, or your parcel being seized by the customs.

I like this ad because the message is universal — not just towards fraudsters but can be applicable to almost every aspect of life — professional (appraisals, office politics), bureaucracy, politics, biased news etc. etc.

‘I am not a fool’ — make it as your ‘Resolution’ for 2025 🙂

Wish you all a wonderful year ahead :)

95. Payments Digest — XI (Year End) was originally published in Auth-n-Capture on Medium, where people are continuing the conversation by highlighting and responding to this story.

What does that mean? — If PAN did the job of ‘shaving’ then new PAN 2.0 will do ‘waxing’!!!

Hey… no worries… rejoice in the fact that PAN 2.0 has QR… Yes, one more QR in our life… Hurray!

I have mixed feelings about income tax… I feel good because at least I am earning enough money so it is taxed, and I feel sad because the Govt takes a big chunk of my earnings and I do not get much in return.

“Hey… Hey… Government builds nice roads for us”

Yes… National Highways are quite nice (Except a few bad stretches, on-going constructions and random potholes).

But again, I pay a toll (tax) to use those roads.

From my home (Bangalore) to my native Athani (Belgaum District), I pay roughly Rs.750 in toll to use ~650 KM road, which has roughly 16 construction spots. (as on Nov’2024)

Charging people for using the road is not new.

Toll collection existed since 2700 BC, and there is mention of toll tax in Chanakya’s Arthashastra.

In modern India, tolls were there on National Highways, just that we were paying in cash (where there is cash, there will be some or other shady things) and long vehicle queues at toll plazas (longer time to give change).

Since the dawn of time, monarchy/kings and later governments have been efficient in collection of taxes. So in 2016, NPCI launched NETC FASTag, to enable digital collection of toll.

Vehicle will have FASTag and wallet linked to it. The user will load funds to the wallet, and the toll plaza will have a Tag reader and the toll amount is debited from the wallet based on vehicle type.

Of course, toll tax payment is exempted for few (politicians, bureaucrats)!!!

FASTag Transaction:

Operations:

A. Settlement:

• Settlement is managed by EGCS (ETC Global Clearing and Settlement) system
• Tag issuer will settle to acquirer via EGCS system (happens 3 times in a day)
• Acquirer will settle funds to Toll plaza’s account

B. Chargebacks/Dispute:

• Customer → Tag issuing bank → NPCI → Acquiring Bank
• If a customer is not happy with the resolution then he/she can raise pre-arbitration and arbitration

As of Nov 2024, 38 banks have issued 101.75 million tags; 12 acquiring banks have collected Rs.63.35 Thousand Crores toll since Jan to Nov 2024. Wow! (Source: FASTag data)

FASTag is now gone beyond the roads, and is used in parking lots of malls.

No need to queue up while leaving malls or getting into arguments with mall cops about miscalculation. Just debit and move out!

FASTag Recharge

You can top-up your FASTag on the FASTag issuer’s site/App or 3rd party Apps (goes via Bharat Connect/BBPS flow).

Monthly Pass: Power users (who cross certain toll plazas regularly) can avail FASTag monthly pass that is managed by IHMCL.

Auto Top-up: Frequent users of FASTag may want a feature of auto top-up of FASTag wallet. Say, whenever the wallet balance hits Rs.100 then top-up the wallet with Rs.1000.

FASTag Wallet top-up (refer to green box) where top-up amount is fixed but frequency is variable (the wallet balance threshold can reach Rs.100 any time).

Requirements of auto top-up of FASTag wallet

• Instant debit status (so wallet balance is updated immediately)
• No pre-debit notification (PDN) [balance may hit threshold any time and need top-up without delay]

As you are aware, we have 4 recurring payment solutions — NACH (paper), NACH (Digital), SI on Cards and UPI AutoPay.

• NACH (Paper based) is ruled out — semi-digital, delay is registration and debit status
• NACH (digital) is good solution — It doesn’t have requirement of Pre-debit notification but the status is not real time
• SI on cards is not ideal because PDN to be sent to customer 24 hours prior to debit
• UPI AutoPay is not ideal because PDN to be sent to customer 24 hours prior to debit

So, to address this, RBI gave exemption for recurring payment solutions from sending PDN for top up of FASTag wallet and National Common Mobility Card (NCMC).

Now… UPI AutoPay can be the ideal solution for this use case.

If you are a frequent traveller (by road) then you can set-up a mandate to top-up FASTag wallet on UPI AutoPay.

Note: The blue quadrant is an interesting use case. UPI’s SBMD (Single Block Multi Debit) can be a good fit for these use cases.

Initially, SBMD was meant only for investment merchants (secondary market i.e. share/stock purchases), but NPCI is rolling it out for other sectors — eCommerce/quick commerce category which can solve issues of refunds and provide faster checkout experience. [Will talk about it some other time]

Murphy’s Rule:

FASTag or not… the queue you are in always moves slower :)

94. FASTag was originally published in Auth-n-Capture on Medium, where people are continuing the conversation by highlighting and responding to this story.