Payments

UPI

Unified Payments Interface — India's instant interbank payment system, the default payment method for Indian SMBs.

UPI was launched by NPCI in 2016 and has become the dominant retail payment method in India by transaction count. Apps like PhonePe, GPay, Paytm, BHIM, and now WhatsApp Pay use the UPI rail.

Key features: instant settlement (within seconds), 24/7/365 availability, no per-transaction fee for users (merchants pay 0.0-0.4% for some categories), QR code support, P2P + P2M flows, and recurring debit support via UPI AutoPay.

Indian SMBs accept UPI via static QR codes, dynamic invoice-specific QR codes, payment links via Razorpay/PayU/Cashfree/PhonePe, and increasingly via WhatsApp Pay native checkout.

India context

UPI represents 70-85% of consumer-facing SMB transactions in India today. For most categories, accepting only UPI + cards is enough; cash is fading. UPI Lite (NPCI's offline UPI) is opening up further opportunity in tier-3+ cities.

Examples

  • A salon gets 80% of payments via UPI QR code displayed at the counter.
  • A coaching center collects fees via UPI AutoPay — automatic monthly debit at fee due date.

FAQ

Is UPI free for businesses?

Mostly yes. NPCI removed merchant discount rate (MDR) for low-value transactions. Larger transactions and certain categories may have small merchant fees via PSP.

What's UPI 2.0?

Newer features: AutoPay (recurring), one-time mandate, signed intent, invoice-in-the-inbox. All major PSPs support it.

Can UPI work offline?

Yes — UPI Lite (since 2022) supports offline payments up to ₹500 per transaction without PIN. Adoption is still rolling out.

Related concepts

UPI AutoPayRazorpayPhonePeGoogle PayBHIMQR code

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Related glossary entries

UPI AutoPay — UPI's recurring debit feature — enables auto-charge for subscriptions, EMIs, and rentals up to ₹15,000 per month per mandate (₹1L for some categories).Razorpay — India's largest payment gateway — processes UPI, cards, wallets, net banking, EMI for online merchants.

More in Payments

UPI AutoPayRazorpay
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