Launched in 2016, the Unified Payments Interface (UPI) is India’s homegrown system that has transformed the country’s financial landscape. For those entering the formal financial system for the first time, UPI serves as an accessible medium that transcends language barriers and complex banking processes. Merchants ranging from tea stalls to jewellery shops have leveraged UPI to streamline transactions.

The surge has been particularly high in Tier 2 and Tier 3 cities and is driven by improved digital infrastructure, a rise in last-mile delivery, and the growth of online businesses post-pandemic. Notably, nearly 2/3 of Paytm’s (a popular Indian e-wallet) new users are from such cities. Trichy is leading in UPI payments for food and beverages, while Amritsar has emerged as the top spender on health and grooming. Nagpur stands out for its substantial spending on micro-sellers and street vendors, while Katpadi Junction in Vellore has recorded a 7-fold growth in digital payments compared to 2021.

In 2022, Maharashtra State Road Transport Corporation (MSRTC) buses enabled cashless transactions for commuters in Akola, Buldhana, Bhandara, and Latur through Android-based machines. Similarly, the North Western Karnataka RTC plans to adopt UPI this year. During its piloting, conductors in Hubballi used individual QR codes from PhonePe and Google Pay for cashless transactions. UPI payment has also been implemented in Public Distribution System (PDS) shops in Kancheepuram, enabling ration card holders to pay through UPI.

However, the Kerala High Court expressed concerns, emphasizing the need for safeguards against cybercrime and illicit fund movements through UPI. Authorities have frozen bank accounts of traders impacted by cybercriminals exploiting UPI, affecting their businesses. As UPI proliferates in smaller cities, addressing security concerns and raising awareness about safe usage becomes crucial.

Are there any initiatives in your city that have encouraged the usage of UPI? Have you faced any challenges in using UPI in your city?