In June 2025, the International Monetary Fund (IMF) released a Fintech note titled “Growing Retail Digital Payments: The Value of Interoperability”, authored by Alexander Copestake, Divya Kirti, and Maria Soledad Martinez Peria.
- The note highlights India’s digital transformation, noting that Unified Payment Interface (UPI) has become the largest retail fast payment system globally by volume.
- India has emerged as a global leader in fast digital payments, driven by the rapid adoption of UPI, even as the use of debit and credit cards sees a gradual decline.
Key Highlights:
i.UPI launched in 2016 is an instant real-time payment system developed by the National Payment Corporation of India (NPCI) to facilitate inter-bank transactions through mobile phones.
- ii. Developed on the Immediate Payment Service (IMPS) framework, UPI now facilitates over 18 billion transactions monthly, emerging as the leading mode of electronic retail payments in India.
- In June 2025, UPI recorded a 32% year-on-year surge in transaction volume, while the total transaction value increased by 20% compared to the same month last year. Daily UPI transactions also saw an uptick, rising to 613 million from 602 million in May 2025.
iii.The note stated that interoperability can accelerate the adoption of digital payments through two key mechanisms:
- First, it empowers users to select their preferred payment application, whether based on brand trust or transaction reliability, without being restricted to a single provider.
- Second, it motivates existing service providers to enhance their quality of service to retain users, while also encouraging the entry of innovative new players into the market.
iv.It also stated that interoperable payment systems, such as UPI, serve as viable alternatives to closed-loop systems, a payment system in which both the payer and the receiver must use the same platform or provider for the transaction to happen.
- It further noted that policymakers must remain alert to the rise of dominant private players to ensure the system stays open, interoperable, and competitive.
v.The note underscores a notable decline in cash usage proxies, such as Automated Teller Machine (ATM) withdrawals, and a concurrent fall in debit and credit card use.
About International Monetary Fund(IMF):
Managing Director (MD) –Kristalina Georgieva
Headquarters – Washington DC, the United States of America (USA)
Member Nations – 190
Established – 1944
