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UPI: Anatomy of a Payment Transaction
- pzmarzly 2mo ago22B transactions a year mean an average of ~700 QPS for the NPCI switch. Of course the traffic is not uniform, it probably peaks at many times that number, but that still doesn't sound that bad - for comparison, a quick Google tells me Nasdaq TotalView ITCH feed peaks at 100k+ QPS at market open.
- repeek 2mo ago22B in the month of June 2026, so 264B extrapolated annually.
- thehamkercat 2mo ago~8.8K TPS on average
- vinay_ys 2mo agoYep. Here's the accurate Month-to-date stats published daily by the network operator NPCI https://x.com/NPCI_NPCI https://x.com/NPCI_NPCI. If you want official stats across all banks, across all payment rails, look at the central bank (RBI)'s website. They put out a lot of useful stats here https://www.rbi.org.in/Scripts/Statistics.aspx https://www.rbi.org.in/Scripts/Statistics.aspx Daily payment settlement stats here: https://rbidocs.rbi.org.in/rdocs/content/docs/PSDDP04062020.xlsx https://rbidocs.rbi.org.in/rdocs/content/docs/PSDDP04062020....
- deleted 2mo ago[deleted]
- arter45 2mo agoA great lesson for system design job interviews - if this is a popular payment system in a country with 1.5 billion people, your theoretical system you're designing for a small company cargo culting Google interviews will not likely support millions or even tens of thousands of average TPS.
- inigyou 2mo agoWell, they are money-moving transactions which means each person only does them a few times per day. If your system's transactions are more like showing the weather on the home screen, it's plausible you could have orders of magnitude more traffic than a payment system.
- AugustoCAS 2mo agoTo add - I agree that payments is great question for systems designs. Merchants need to receive the money and being able to transact with it. Imagine the merchant receiving the payment is something like Amazon or Ebay (sorry, I don't know what similar large online retailers are in India). With the above, the problem becomes harder. Imagine receiving 2-3k TPS just on one account during a black Friday or similar day. Now your system has to perform fine for accounts that do 30 transactions an hour for a retail customer and 3k a second for a merchant.
- vinay_ys 2mo agoThe right comparison for Nasdaq's order processing volume or messaging volume would be India's National Stock Exchange (NSE). It does more executed orders per day than nasdaq. I worked on scaling UPI a few years ago. Real-time Payments is vastly more complex as it is much more distributed - each transaction involves the two banks holding funds, two end-user apps (and their banks), and the network (npci) – for the payment to complete end to end, multiple message exchanges need to happen between these parties while the user at both ends are waiting. So, if you measure the scale in messages/sec it would 10-25x higher. Real-time payment rails that works 24/7 365 days a year from any bank to any bank (domestic, no exceptions) for free is truly a game-changer. Compare that to US payment rails which is slow and expensive. Apart from UPI, India has 3 more payment rails – NEFT (similar to ACH – batch settlement), IMPS (similar to UPI, instantaneous - but different user experience), RTGS (real-time, intermediated by the central bank RBI, but only for high-value transactions) – all are 24/7/365 and free. Then, there's credit card rails – apart from Visa and Mastercard, India also has RuPay which has much lower interchange rate.
- dj0k3r 2mo agoNone of them are free, most banks now charge nominally (look at NEFT and IMPS charges). UPI itself is paid off by taxpayers. Also RTGS is the only ISO 20022 complaint payment rail (back when it wasn't globally very common) - something that needs to be appreciated more. People need to realise what NPCI offers is vastly different from what RBI offers. In my opinion what NPCI is offering will end up negatively impacting the general population in the long run.
- crop_rotation 2mo agoJust for my curiosity, why do you think "what NPCI is offering will end up negatively impacting the general population in the long run."
- tecoholic 2mo agoI would guess NPCI being a private body with transaction charges being borne by the Indian government is a net negative in the long run. It costs everyone. NEFT and RTGS on the other hand is RBI regulated with clear pricing and costs only those involved. The cost structure needs to change, but then, it won’t be possible. To pay 5 rupees for a chocolate with your phone and get even 0.5 added on top would make the consumers switch to cash almost immediately.
- jesuswasjew 2mo agoCentralized, kyced, private money transaction network. Is this something good?
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- haskman 2mo agoYes it is. It's not trying to be new money, it's your money that already works.
- fragmede 2mo agoHow is it KYCd yet also private?
- globemaster99 2mo agoIt's the intention and use case. The government want to reduce the fund leakages and reduce corruption, directly transfer the money to citizens, reduce transaction costs. Hence it works. The government does not track all the transactions. You need a police FIR, to review these transactions. In short, Indian government does not track or they don't have the scaling to track. But they can do it, if there is any criminal complaint.
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- khriss 2mo ago> In short, Indian government does not track or they don't have the scaling to track This is completely wrong. Not only can the Indian govt track each these transactions, it's actually written into law via the 'anti money laundering' bill (PMLA) and the income tax act. For a very high level overview, see https://www.bankbazaar.com/tax/tax-on-upi-transactions.html https://www.bankbazaar.com/tax/tax-on-upi-transactions.html From the article 'Can the Income Tax Department Track Your UPI Transactions? Yes. With the integration of PAN, Aadhaar, and Know Your Customer (KYC) via all banking and fintech channels, all your UPI transactions can be tracked. If you think your small-value digital transfers won't be traced, you are mistaken. UPI payments are directly linked to your bank account, and bank records can be obtained by tax officers through scrutiny or reassessment.' Specifically, no complaint or warrants are needed to enable access to UPI transaction records.
- elendilm 2mo agoI have the utmost respect to people who makes UPI work. Made even the old people in the nation completely go digital for payments - a feat unparalleled in the world.
- dominotw 2mo agoit worked because india never had credit card payments( at scale ) . they went straight from cash to digital payments.
- sometimes_all 2mo agoWhat does this have to do with credit cards? India always had credit cards at a scale comparable to most countries, and they always were a regularly-used of payment for medium-sized "white" transactions; they just weren't that useful for day-to-day transactions in terms of most locals' ways of working where the actual India-level scale is, and not the primary way of transacting as in the US. And looking at how Visa and Mastercard work, and what they tried to do in Brazil, I think that's a great thing. As GP says, you could _never_ get the older generation to use a credit card even when they had the means to do so. But they took to UPI just fine, and many now prefer it over cash. Also, credit card issuance and acceptance in India is growing quite a bit right now, despite (because?) of UPI.
- nafey 2mo agoMost mom and pop stores (Kirana stores) in India cannot get a PoS device easily. UPI solves this problem by being much easier for merchants to onboard and start accepting payments with just a QR code instead of a PoS device.
- mayama 2mo agoNot just about PoS device. During early credit/debit card days, lot of stores would pass on merchandise fees directly to customers, giving discount in case of cash transactions, some stores still charge extra. This is not allowed in west as credit cards require same price as cash transactions, and most users perceive credit card rewards as something positive as one would lose out on this rewards when using cash. In India perception is that one would be making loss* if using credit cards. UPI with no fees as of now, is perceived as equal to cash by most people not dealing with black money.
- GZGavinZhao 2mo agoHow is this different from Alipay/WeChat Pay in China? Handling transactions of this volume is an amazing technological feat, kudos to the team! However, I don't think this mobile QR code paying system is anything novel. Alipay rose to popularity much earlier (I can't recall exact when, but it was already super popular in ~2010, and definitely ubiquitous by 2015).
- repeekad 2mo agoMuch of the world doesn’t like having a single entity own and control the process end to end, it’s more efficient but there’s only one point of trust. Multiple institutions that have to check each other means you don’t have to trust a single entity with everything.
- bri3d 2mo agoIt’s a completely different backend model; as far as I know alipay works just like PayPal where transactions are fully “internal” - the buyer pays Ant Group and the seller cashes out at a later date. UPI is a real inter-organization payment system more akin to credit card processing, where fund requests flow from the payer, through a payer processor, through a merchant processor, and finally to their end destination, and the actual reconciliation happens through a bank transfer system. It’s a much less centralized system.
- zaptheimpaler 2mo agoUPI is more like a routing/reconciliation layer like VISA that can work across any bank/wallet, and that core is run by a non-profit government org. It doesn't take custody of the funds and doesn't centralize the information into a private corporation. The fee is also minimal and flat-rate with no profit incentive, instead of paying a percentage of the entire countries transaction volume to some private company. I would guess that adds up to a huge amount of money saved overall.
- agnishom 2mo agoThe main difference is that the core API is public infrastructure (run by a government authority). The apps are run by different companies but the backbone is interoperable by design
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- colesantiago 2mo agoUPI is fantastic software and the pride of great software engineering from India. Excellent engineering. I only wish more countries would implement something like UPI in other countries and get rid of inferior and broken solutions like crypto.
- inigyou 2mo agoI too want the government to monitor my transactions in real-time so they can disable access to my money if they think I'm a terrorist.
- tourist2d 2mo ago[dead]
- khurs 2mo agoInstant payment systems by country: https://en.wikipedia.org/wiki/Instant_payment#Notable_instant_payment_systems_by_country https://en.wikipedia.org/wiki/Instant_payment#Notable_instan...
- codethief 2mo agoGreat article. I would love to see a similar article about how POS credit card / debit card payments work in the US/Europe, depending on whether you use the card's magnet stripe, chip or your phone (Apple Pau/Google Pay/…) to pay.
- adithyassekhar 2mo agoI like the article but “ Bricolage Grotesque” and the claude background colour just puts me off.
- dyauspitr 2mo agoWhy? It looks pleasant.
- adithyassekhar 2mo agoIt does. But I’ve seen it so many times now.
- sometimes_all 2mo agoThe content is good, but the crore/billion toggle is fantastic. A great addition, I hope it catches on in India-specific websites. I just wish it had a tooltip because its purpose was not immediately clear (CR/BN is a bit cryptic).
- prtk25 2mo agoThanks for the feedback! I will try to make it clearer.
- OJFord 2mo agoOoh that's what that is - I thought it looked like a language toggle, but I couldn't work out the languages or in what language the abbreviations were (like HI/EN), and obviously it didn't have that effect. That is a nice idea.
- nocoder 2mo agoQuestion to op - Do QR based systems in other SEA countries like promptpay in Thailand also work on similar logic? Also, great website and layout, very respectful of the reader. Clean and with zero distractions.
- prtk25 2mo agoThanks for the kind feedback. I am not very familiar with the PromptPay architecture, but a quick search reveals that the user-facing app for QR scanning is bank-owned, rather than a Third-Party Application Provider (TPAP) like Google Pay is for UPI. In the case of UPI, you can link multiple accounts from the same or different banks to a single TPAP. Another potential difference is the interbank protocol implementation. For UPI, the messages involved in a transaction are asynchronous. When NPCI calls the remitter bank for a debit request (ReqPay message), the bank is only supposed to send back an acknowledgement message (Ack) in the same HTTP request. Once the processing is done, the bank's switch sends a response (RespPay message) to a callback endpoint at NPCI (which, in turn, returns an Ack to the remitter bank). A similar flow happens when NPCI sends a request to the beneficiary bank for credit.
- freakynit 2mo ago[dead]
- drewfax 2mo agoYes, UPI works. But it's a terrible system for privacy and autonomy. It has so many intermediaries, requires phone number and linked to person's identity. It should not be called a peer-to-peer payment system in anyway. It is controlled by the government rather than Visa or Mastercard. That's the only the difference.
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- stAInley 2mo agoSure, but visa and mastercard share their transactions with the US government (among others). "Hot Watch": where the US gov gets real time surveillance on a target. Bank Secrecy Act: where private networks and their issuing banks are legally mandated to act as unpaid deputies for the state. At least with UPI you're sharing with less governments?
- thedelanyo 2mo agoMoney after all is controlled by the government anyway.
- brainless 2mo agoFor those outside India and/or non-active users of UPI - it drives so many transactions that even for an engineer, I forget how often I use it: - Payments between family members - Payments for every tiny/small item - a bag a chips or a cup of tea for example - Payments for car mechanic, plumber, or other services - Payments for online shopping or services - yes web apps show the UPI QR code and I can pay from my phone by scanning. Mobile apps will simply open the UPI app's payment screen - Buses, flights, trams, taxis, trains - online or on road On an average day in a city like Kolkata, me and my partner make up to 20-30 transactions. I live in a small Himalayan village most of the year and I still make roughly 6-8 transactions a day.
- dolphenstein 2mo agoAfter adding UPI as a payment option to my little microSaaS, I'm finally starting to see sales in India. Was like trying to extract hen's teeth to get an Indian to sign up before that.
- porridgeraisin 2mo agoYes this. Anytime a SaaS supports UPI Autopay, I'm 10-100x more likely to subscribe. For context: it's basically a recurring payment but you open the Autopay section in Google pay or whichever app and it shows you all your subscriptions right there (which is a major +), the transaction history, and cancellation happens in the UPI app itself I don't have to faff around in the SaaS and deal with potentially some dark patterns.
- dyauspitr 2mo agoThat’s absolutely huge. All your subscriptions in one place that you can just turn off from there directly. It’s one of my favorite things about payments going through the apple App Store.
- porridgeraisin 2mo agoUnlike the app store, there is no 30% fee. And also. No chargebacks, so it's simple for merchants as well.
- mndgs 2mo agoSo? Read the article, and? Some pretty basic payment flows.. Nothing about settlements, payment card messaging flow (you see a simplified logic in the article), nothing about other payment rails.. Come on.
- filleduchaos 2mo agoMaybe you just don't know what you're looking at? UPI is an inter-bank system, why on earth would you expect an article on it to contain a payment card messaging flow discussion?
- larodi 2mo agoI can sense Claude behind all interactive graphics here, yet it apparently does great job to further make the point and interestingly TimesOfIndia is a major media outlet.
- gowthamgts12 2mo agoit's nowhere related to TimesOfIndia. It's `Time Series of India`. from their footer: > Time Series of India is an open-source project charting India's public data. All data belongs to the publishing agencies; charts and text may be cited with attribution.
- shscs911 2mo agoIt's Time Series of India, not Times of India. https://timeseriesofindia.com/about https://timeseriesofindia.com/about https://github.com/time-series-of-india/tsoi https://github.com/time-series-of-india/tsoi I also thought it was from Times of India initially
- teyc 2mo agoWhat funds the UPI system? I assume that it’s cheaper than MC/Visa rails?
- filleduchaos 2mo agoIt's an industry-owned initiative, i.e. all licensed banks, including the central/apex bank (pretty sure this is the Federal Reserve in American parlance?) are stakeholders. The funding comes almost entirely from these banks, and the transfers themselves are free (between personal/individual accounts, at least). I'm pretty sure the government partially reimburses the banks to soften the cost, so I suppose you could say it's also funded by government subsidy? Some similar systems have transaction fees and run as for-profit organisations, but the fees are tiny compared to card transactions. For instance Nigeria's NIP has a maximum fee of ₦53.75 (roughly four cents), with most banks allowing you to transfer up to ₦5 million in a single transaction.
- Superbowl5889 2mo agoGreat Read ! Thank you for such detailed introduction to UPI, I'm lookingfor such articles for mastercard or VISA
- bsa33 2mo agoI am Indian. I dont use UPI. Never have. Has not effected my life in any way.
- ksec 2mo agoPIX from Brazil which is extremely similar to UPI. Are there any reason why we can't have a global UPI system? Open Source with each Government running their own instances.
- HexDecOctBin 2mo agoUPI has been adopted by eight countries and a few dozen are in progress [1]. Additionally, UPI has started to integrate with other nation's similar system (Singapore's PayNow [2] for instance). [1] https://www.pib.gov.in/PressReleasePage.aspx?PRID=2224505®=3&lang=2 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2224505&re... [2] https://www.nipl.com/how-it-works/frequently-asked-questions/upipaynow https://www.nipl.com/how-it-works/frequently-asked-questions...
- ksec 2mo agoOh nice so this is really happening!
- koe123 2mo agoUPI is cool! Anyone can put numbers to how this affects the growth of india? Formalizing parts of the economy perhaps?
- john-frandsen 2mo ago[flagged]