India's payments chief says AI will drive UPI from 750 million to a billion daily transactions

At a glance:

• NPCI CEO Dilip Asbe projects AI will enable UPI to reach a billion daily transactions through fraud detection, credit, and voice onboarding.
• PhonePe and Google Pay control over 80% of UPI's transaction share, with a regulatory cap of 30% set to take effect in 2026.
• NPCI's BHIM app holds ~1% market share but aims to serve as a sovereign and secure alternative amid India's push for AI-driven financial infrastructure.

AI as the catalyst for UPI's next growth phase

India's Unified Payment Interface (UPI) has already achieved remarkable scale, processing over 750 million daily transactions. However, National Payments Corporation of India (NPCI) MD and CEO Dilip Asbe believes artificial intelligence will be pivotal in unlocking the next half-billion users. Speaking at Mumbai Tech Week, Asbe emphasized AI's potential to enhance fraud prevention, expand credit access, and streamline multilingual voice-based onboarding. "AI will be used very effectively when we look at the next wave of UPI," he said, highlighting the need to protect users while leveraging digital footprints for financial inclusion.

The push toward AI-driven payments aligns with India's broader ambitions. The country is actively debating AI sovereignty, with proposals for a $5 billion annual sovereign AI fund and efforts to develop small language models tailored to local languages. Asbe sees this as an opportunity for Indian banks and fintechs to create deterministic models. NPCI's own FIMI model, launched to resolve user disputes, already serves over a million users for mandate cancellations and issue resolution. Yet, challenges remain: voice-based payment systems introduced in 2023 have seen limited adoption due to accuracy concerns, underscoring the technical hurdles ahead.

Market concentration and regulatory pressures

The UPI ecosystem is dominated by two players: PhonePe and Google Pay collectively hold over 80% of transaction volume. This concentration has prompted regulatory scrutiny, with a proposed cap limiting any single app to 30% market share set to take effect on December 31, 2026, unless deferred. Asbe acknowledged the low switching costs between apps but argued that the lack of a viable commercial model for new entrants explains the duopoly. "The moment we see the commercial model being available to the ecosystem, I believe newer players will start investing very heavily," he said.

NPCI's own BHIM app, despite growing transaction volumes, maintains only ~1% market share. Asbe clarified that there is no specific target for BHIM's share, but as India's digital economy scales toward major tech IPOs and $110 billion AI infrastructure plans, the app is positioned as a sovereign and secure alternative. This strategic positioning comes amid global debates on data sovereignty and the need for homegrown solutions in critical infrastructure.

Regulatory and technical considerations

Asbe emphasized the importance of regulatory safeguards for AI-powered finance. He advocated for systems that can trace user instructions and consent given to AI agents in case of disputes. While NPCI demonstrated agentic commerce and payments with Razorpay in 2023, broader adoption has stalled. The integration of AI into financial systems raises questions about accountability and transparency, particularly in a sector as sensitive as payments.

The technical readiness of voice models remains a bottleneck. Asbe noted that current systems lack the accuracy required for widespread adoption, especially in a linguistically diverse market like India. This highlights the gap between AI's theoretical potential and practical implementation in real-world payment ecosystems.

Strategic implications for India's digital economy

India's push to leverage AI for UPI's expansion reflects its broader strategy to become a global leader in digital public infrastructure. The proposed sovereign AI fund and focus on small language models signal a long-term vision for self-reliance in technology. For NPCI, this means balancing innovation with regulatory compliance while ensuring that AI tools serve the public interest.

The 2026 regulatory deadline adds urgency to the conversation. If enforced, it could reshape the competitive landscape, forcing incumbents to adapt and opening opportunities for new entrants. However, Asbe's optimism hinges on resolving technical and commercial barriers. The success of AI-driven initiatives like FIMI and voice onboarding will be critical in determining whether UPI can achieve its billion-transaction goal while maintaining trust and security.