UPI has transformed the digital payments landscape in India, the IMF paper said. Photo: X/@UPI_NPCI
A new paper published by the International Monetary Fund has lauded the impact of the Unified Payments Interface (UPI) system in India and has said those looking to move from cash to digital payments should also carry out the other mobile data, banking, and digital identity related steps that India did.
According to a paper titled ‘Growing Retail Digital Payments: The Value of Interoperability’, authored by Alexander Copestake, Divya Kirti, and Maria Soledad Martinez Peria of the IMF and published on June 25, previous research has attributed the success of UPI in India to demographic factors and the “Demonetisation shock”.
However, the authors argue that the interoperability offered by UPI, which means that any company can ride on the platform, has also played a significant role in its widespread adoption.
“UPI has transformed the digital payments landscape in India,” the paper said. “Evidence from the platform suggests that interoperability can improve users’ experience of digital payments and expand overall adoption.”
The authors added that interoperability directly increases the users’ freedom to choose their favourite apps, thereby allowing them to take full advantage of the variety and quality of apps available, and not just be restricted to a single app.
However, apart from setting up the basic infrastructure for an interoperable system like the UPI, countries that want to move their populations from cash to digital payments have to also take other steps that India did, the paper said.
“Providing infrastructure for interoperable systems, or otherwise supporting interoperability through regulation, could be a promising avenue for countries seeking to transition from cash to digital payments,” the paper said.
“For such policies to be effective, policymakers should first ensure that complementary enabling investments are in place—as with the reduction in mobile data costs and the expansion of bank accounts and digital identity in India,” it added.
Published – June 25, 2025 06:30 pm IST
