India reached 100B digital payments in 2023: Could it work in the US?

UPI has had a significant impact on India's economic growth, helping the Indian economy save about $67 billion since April 2016, according to a 2023 World Economic Forum report. The technology helps small businesses by reducing transaction costs and bolstering operational efficiency and cash flow. UPI also opens small businesses to a broader customer base due to its accessibility to those who prefer not to carry around cash.

About half of the payments made via UPI can be categorized as small payments, such as a cup of milk tea worth 10 cents or a $2 bag of vegetables. With no minimum transaction amount, customers and merchants can use the technology for various microtransactions and macrotransactions.

Speaking to the Times in 2023, Dilip Asbe, the managing director and CEO of the NPCI, said as of that year approximately 300 million individuals and 50 million merchants used UPI for sending and receiving money.

During the COVID-19 pandemic, the Indian government used UPI to send financial aid to nearly 200 individuals.

India has also worked to export the technology to other countries. In 2023, Bhutan and Nepal started facilitating transactions through UPI. During the February G20 summit that year, Indian Prime Minister Narendra Modi expressed India's willingness to assist other countries with setting up their own similar payment systems.

Nonresident Indians living in Australia, Canada, Hong Kong, Oman, Qatar, Saudi Arabia, the United States, the United Arab Emirates, and the United Kingdom started using the technology in 2023 on their international phone numbers. In February 2024, merchants in France began accepting UPI—including at the Eiffel Tower.

Zelle, Venmo, and Cash App are common peer-to-peer and peer-to-merchant payment methods in the U.S. similar to UPI.

Venmo and Cash App are similar to UPI in that users can create usernames they can share to send and receive money instead of account and routing numbers. Both apps also allow users to scan QR codes to transact.

Unlike UPI, however, these services don't allow instant deposits of money directly into someone else's bank account. In terms of instant bank account deposits, Zelle is the U.S. payment service most similar to the UPI. Although Zelle doesn't use QR codes or usernames, one can use their phone number or email to send and receive money.

Unlike the UPI, these services are private initiatives and do not run on public digital infrastructure. Sending money through wire or the automated clearing house system takes about one to three business days in the U.S.

In 2023, the Federal Reserve announced its new instant payments infrastructure, FedNow, was live and accessible to participating financial institutions. Like Zelle, the FedNow service processes and settles transactions instantly, allowing funds to be sent and received quickly. Like UPI, customers cannot directly access FedNow; instead, they can access the service through fintech platforms and banks that subscribe to FedNow as their digital highway for transactions.

FedNow is more similar to India's real-time gross settlement system than the UPI in that it lacks any analog to the virtual payment address. QR codes cannot be used to make or receive payments. Instead, customers must use their account and routing numbers to send and receive money.

FedNow faces competition from The Clearing House's RTP, or real-time payments network, first made available to participant financial institutions in 2017. As the FedNow program struggles to attract new participant institutions, it has also sparked interest in the RTP network. The Clearing House is a private association of federally insured banks; unlike FedNow, the service is not public infrastructure.

UPI's global reach, and whether countries like the U.S. will adopt it, is still unpredictable—but UPI undeniably stands to influence the global digital payment landscape for years to come.

Story editing by Nicole Caldwell. Copy editing by Paris Close. Photo selection by Clarese Moller.