
Scaling UPI: The Economics Behind NPCI’s New Operational Limits
Although the Unified Payments Interface (UPI) has been operational for a decade, it does not exhibit the obsolescence typical of legacy infrastructure; rather, it currently faces challenges associated with rapid and unprecedented scalability. NPCI launched it in April 2016 to make bank-to-bank transfers instant and interoperable, so a payment from any bank app could reach any other bank account without the usual friction. The decision that really made it explode came later: in January 2020, the government set UPI’s Merchant Discount Rate to zero, so neither payer nor payee would ever see a fee. That single choice is arguably why the neighbourhood vegetable seller and the metro-station tea stall started accepting UPI as readily as a large retail chain.






