UPI and the rise of instant payment systems: what India, Brazil and Europe built

Case studies · Published 2026-09-29

Baskets of potatoes, tomatoes and green beans piled on a market stall — A vegetable stall in Ooty municipal market, Tamil Nadu, the kind of small merchant instant payments reach. Photo: Timothy A. Gonsalves, CC BY-SA 4.0, via Wikimedia Commons.

Instant payment systems, where money moves between accounts at different institutions in seconds, at any hour, have become the most visible form of digital public infrastructure. India's Unified Payments Interface (UPI) is the largest by number of transactions; Brazil's Pix showed that a central bank can drive adoption at speed; and the European Union has turned instant euro transfers into a legal obligation for banks.

UPI in brief

UPI was launched in 2016 by the National Payments Corporation of India (NPCI), a not-for-profit company set up in 2008 by banks at the initiative of the Reserve Bank of India (RBI) and the Indian Banks' Association, and overseen by the RBI. It sits on top of India's existing real-time bank transfer infrastructure and adds three things:

Aliases. Users pay to a virtual payment address (such as name@bank) or a phone number, without sharing account details.
Open participation for apps. Besides banks' own apps, licensed third-party application providers can offer UPI payments, so a messaging app, a fintech or a retailer can build payment features on the same rails.
Interoperable QR codes. Any UPI app can scan any merchant's UPI QR code, which removed the need for merchants to hold separate accounts with competing wallets.

Later additions extended UPI to feature phones (UPI 123PAY, 2022), small offline-friendly payments (UPI Lite, 2022), and credit lines and RuPay credit cards linked to UPI.

Scale, as published

NPCI publishes monthly statistics on its UPI product statistics page. According to press coverage of those figures, UPI processed about 21.6 billion transactions in December 2025, and roughly 228 billion transactions over calendar year 2025, compared with about 172 billion in 2024. These are counts of transactions, not of users or of economic value created; we discuss why that distinction matters in measuring DPI impact.

Why it grew

Several factors are commonly cited, and they are hard to disentangle:

Zero merchant fees. Since January 2020, Indian law has barred merchant discount rates on UPI and RuPay debit card payments, which made accepting UPI free for merchants of all sizes. The government has partly compensated the industry through incentive schemes.
Prior infrastructure. Widespread bank accounts (expanded through the Pradhan Mantri Jan Dhan Yojana from 2014), mobile numbers linked to accounts, cheap mobile data and the Aadhaar identity system lowered the barriers to onboarding.
Competition among apps on user experience, made possible by open access for third-party providers.
Shocks. The 2016 demonetisation of high-value banknotes and the COVID-19 pandemic both pushed people towards digital payments.

Brazil's Pix and the central bank model

Pix, launched in November 2020, is owned and operated by the Banco Central do Brasil. Participation is mandatory for larger financial institutions, and Pix supports aliases ("chaves Pix" such as a phone number, email or tax number), QR codes and payments between people, businesses and government. Where UPI is run by a bank-owned not-for-profit under central bank oversight, Pix shows the option of the central bank itself running the rails. See the Banco Central do Brasil's Pix page.

Europe: instant payments by regulation

The EU took a regulatory route. Regulation (EU) 2024/886 on instant credit transfers in euro entered into force in April 2024. It required payment service providers in the euro area to be able to receive instant euro transfers by 9 January 2025 and to send them by 9 October 2025, at a price no higher than standard transfers. It also requires a verification of payee service that checks whether the name of the payee matches the account number before a payment is sent, for instant and standard transfers alike. Later deadlines apply to institutions outside the euro area and to payment and e-money institutions. The text is on EUR-Lex.

Europe's approach makes instant transfers universal at the account level, but it does not by itself create a common consumer front end like UPI apps or Pix keys; that layer is left to banks and private schemes.

Three models compared

	UPI (India)	Pix (Brazil)	EU instant payments
Launched	2016	November 2020	SCT Inst scheme from 2017; mandatory under Regulation 2024/886
Operator	NPCI, bank-owned not-for-profit, overseen by RBI	Central bank	Existing clearing systems; rules set by EU law
Third-party apps	Yes, licensed providers	Through participating institutions	Depends on banks and schemes
Aliases	Virtual payment addresses, phone numbers	Pix keys	Not harmonised; verification of payee required
Merchant fees	Zero by law for most UPI payments	Set by participants; free for individuals	No higher than standard transfers

Open questions

Concentration on neutral rails

UPI's rails are open, but a few third-party apps account for most transactions. NPCI proposed a cap on any single app's share of volume in 2020; the compliance deadline has been postponed several times. The case illustrates a broader point in our design principles: neutral infrastructure does not guarantee a competitive market on top of it.

Who pays for the rails?

Zero merchant fees helped adoption, but someone pays for processing, fraud prevention and innovation. The balance between public subsidy, bank revenues and future fees is a live policy debate in India.

Fraud and scams

Instant and irrevocable payments are attractive to fraudsters, especially "authorised push payment" scams where victims are tricked into sending money. Verification of payee in the EU and transaction limits, alerts and cooling-off features elsewhere are partial answers.

Cross-border links

Bilateral links, such as UPI with Singapore's PayNow (February 2023), are growing. The BIS Innovation Hub's Project Nexus has explored a multilateral model for connecting domestic fast payment systems instead of building one-to-one links. See our Singapore case study.

Sources

National Payments Corporation of India, UPI product statistics.
Business Standard, UPI transactions hit record 19.47 billion in July 2025 (August 2025), and Deccan Chronicle, Rs 300 lakh crore of UPI transactions made in CY2025 (January 2026), both reporting NPCI data.
Banco Central do Brasil, Pix.
Regulation (EU) 2024/886 on instant credit transfers in euro, EUR-Lex.
Bank for International Settlements, Project Nexus.