India’s Unified Payments Interface (UPI) has completed a decade after growing from 1.8 crore transactions in its first financial year to more than 24,000 crore transactions in 2025-2.
The progress has turned a once-new payment system into a central part of everyday commerce. The platform processed 24,162 crore transactions worth about ₹314 lakh crore in FY26, marking an almost 13,000-fold rise in volume since FY17.
UPI’s 10-Year Journey: From ₹7,000 Crore to ₹314 Lakh Crore
Launched in 2016 by the National Payments Corporation of India (NPCI) under the regulatory oversight of the Reserve Bank of India (RBI), UPI was designed to make bank-to-bank payments simpler and interoperable.
Its scale has changed dramatically. Annual transaction value rose from around ₹7,000 crore in FY17 to nearly ₹314 lakh crore in FY26, while the number of banks on the network increased from 44 in FY17 to 703 by FY26. By July 2026, 741 banks were live on UPI.
The growth is no longer limited to large transfers. Person-to-merchant payments account for about 63% of UPI transaction volume, with 86% of such transactions in FY26 below ₹500. That points to how deeply UPI has become part of routine spending, from local shops to small everyday purchases.
Also Read: Lok Sabha Passes Bill Enabling UPI Charges, Paving Way for Future MDR
Zero MDR Raises the Sustainability Question
The success, however, has created a difficult business question. Most UPI payments continue to operate at a zero Merchant Discount Rate (MDR), leaving banks and payment companies with limited direct income despite the costs of maintaining technology, security, fraud controls, and compliance.
The government’s incentive mechanism partly compensates banks and payment service providers, but industry discussions increasingly centre on whether the existing model can remain financially sustainable as transaction volumes grow.
UPI has therefore evolved beyond being simply a payments product. Banks can benefit indirectly through higher account activity, deposits, lending, cross-selling and lower dependence on physical cash infrastructure.
UPI’s first decade was about proving that India could build payments infrastructure at population scale. As it enters the next decade, the market question is no longer whether Indians will use digital payments. That battle has largely been won. The watch now is on sustainability, monetisation and whether UPI can keep expanding without compromising the low-cost access that made it successful in the first place.
Samarjit Kaur is a journalist and communications professional covering technology & emerging digital trends. With a focus on clarity and context, she reports on developments shaping industries and governance. When not reporting, she chooses to plug-in and relax on her playlists and plan her next bucket-list trips!
