Since its launch in 2016 by the National Payments Corporation of India (NPCI), the Unified Payments Interface, known as UPI, has sparked a digital and payments revolution across India and inspired similar initiatives worldwide.

The unprecedented growth of the Indian instant payment method has rapidly transformed the country from a predominantly cash-based economy into a global leader in digital payments.

In recent years, cash usage in the country has declined significantly, according to a study conducted by the Reserve Bank of India (RBI). The analysis introduced a Cash Usage Indicator (CUI) that evaluates the share of cash usage by considering both physical and digital payment methods. It has dropped from over 80% in 2021 to as low as 52% in 2024.

At the same time, UPI's share of P2B (person-to-business) payments grew significantly, currently representing about 62% of total transactions and 26% of their value, and growing twice as fast as P2P transactions, per the RBI study.

Not only does UPI support transactions through QR codes, enabling customers to scan and initiate transfers seamlessly, it also integrates with a wide range of digital wallets, third-party apps, and banks, allowing payments through any compatible platform. 

With over 100 applications supporting UPI—including WhatsApp—it has become a versatile and widely adopted payment method. For instance, a customer can use apps like Paytm or PhonePe to pay a merchant with UPI, or using a Google Pay QR code.

As a direct result of their integration with UPI, apps like Paytm, Google Pay, and PhonePe have also achieved widespread consumer acceptance. These platforms offer more than just P2P transfers or card storage; they also enable users to pay utility bills, book tickets, and even, in some cases, make investments, embedding themselves as essential tools for everyday financial management.

Finally, UPI has also evolved to different use cases, gradually going from P2P to P2B transactions, including recurring payments through the UPI AutoPay feature, and credit card-linked payments via RuPay, a local credit card network. 

“UPI is the poster child of instant payments worldwide not only for its digital inclusion and uptake but also for the ecosystem it created around itself,” says Rashmi Satpute, Country Director for India at EBANX.

Another important aspect of local consumer behavior deserves attention: many Indians perceive UPI as a more convenient alternative to credit cards, especially for small value, recurring transactions. This perception stems from UPI's ability to facilitate transactions without requiring the disclosure or storage of sensitive card information. This feature has significantly enhanced security and fostered greater consumer trust.

UPI's influence has expanded beyond India, shaping the payment ecosystems of other South Asian economies while promoting the usage of QR code transactions. Countries such as Bangladesh, Nepal, and Sri Lanka are leveraging this alternative payment method as a blueprint to establish their own instant payment infrastructures.

There are ongoing discussions around forming a South Asia payments bloc, currently called Project Nexus, enabling QR code interoperability between UPI and similar regional systems. “In many Asian markets, QR codes are synonymous with wallets for consumers,” explains Lindsay Lehr, Managing Director of Payments and Commerce Market Intelligence (PCMI).

Stakeholders in emerging economies, including central banks from many countries, are currently either piloting or refining their own instant payment solutions to enhance their functionalities and expand their reach.

In Latin America, Juliana Etcheverry, Director of Country Growth – Latin America at EBANX, highlights Argentina's Transferencias 3.0, Mexico's SPEI, and PSE from Colombia, which is poised to launch an even more expansive system, Bre-B.

These systems are evolving and significantly impacting financial and digital inclusion in many emerging economies. Individuals who once relied on cash have now been integrated into the financial system, many of whom were previously unbanked. This trend not only broadens payment options for the population but also improves access to digital commerce for a broader range of consumers.

Looking ahead, Colombia is set to launch an interoperable instant payment ecosystem led by Banco de la República, the country’s Central Bank. Inspired by Brazil’s Pix system, the new initiative, called Bre-B, aims to transform financial inclusion and accelerate the adoption of digital payments across the nation.

According to PCMI, account-based transfers already constitute 34% of the country's digital commerce volume, and the arrival of Bre-B can potentially increase this share. Today, Pagos Seguros en Línea (PSE) leads the market, accounting for 31% of all online transactions.

In Egypt, a predominantly cash-based economy where a massive 98% of online consumers prefer to pay in cash and 38% of e-commerce volume is paid with “cash on delivery,” per PCMI, digital payments are gaining traction. 

According to a recent Mastercard survey, consumers in Egypt showcased a remarkable interest in emerging payment methods. In 2022, approximately 88% of the population embraced at least one emerging payment method, such as digital wallets, Buy Now, Pay Later (BNPL), and, more recently, instant payment systems.

This is reflected in digital commerce, where cash payments reached a plateau. Meanwhile, BNPL is expected to grow 17% annually through 2027, followed by digital wallets (15%) and account-based transfers (14%).

One notable development in the country is InstaPay, a digital payment solution launched by Egypt’s Central Bank in March 2022. By November 2023, the app had gained considerable traction, with 6.2 million registered users, according to Egypt's financial authorities.

InstaPay integrates digital wallets and bank accounts within a single infrastructure. To register for InstaPay, users need at least one bank account or a prepaid/debit card, enabling broader financial inclusion across the country.

Initially designed for P2P transfers, InstaPay is increasingly being used informally for merchant payments. For example, a customer dining at a restaurant can instantly transfer money from their account to the owner’s account. 

This informal use case exists because the central bank has yet to introduce a dedicated business version of InstaPay, which will eventually allow for seamless integration with e-commerce platforms during the checkout process. Despite that, InstaPay already has an estimated 1% share of Egypt's digital commerce, per PCMI, and it is expected to continue growing in the coming years.

At this stage of development and adoption by Egyptians, InstaPay serves as a good example of how disruptive payment methods typically originate in P2P, gradually expand to P2B (person-to-business), and then eventually transition to e-commerce. 

“Instant payment is emerging and trending [in Egypt], and it’s poised to become even more impactful in the coming years, mirroring what happened in India with UPI," says Karim Elbaz, Director for MENA at EBANX. 

Elbaz also emphasizes InstaPay’s enormous potential for digital commerce: “This payment method has significant promise, especially due to its very low processing fees compared to traditional options like credit cards.” 

In South Africa, a consortium of payment providers and banks launched a new real-time payment system called PayShap in 2023. This instant payment platform is part of the South African Reserve Bank's initiative to enhance financial inclusion and foster "trust and familiarity with electronic payments."

PayShap is the country's second real-time payment system, joining Real-Time Clearing (RTC), South Africa's electronic fund transfer system for banks, which was introduced in 2006 and designed for large-scale transactions.

According to BankservAfrica, PayShap processed over 18 million transactions in its first year, with a total value exceeding USD 588 million.

This resulted in an average transaction size of approximately USD 32. This transaction size is promising, as it suggests that the system is being used for smaller and potentially more frequent purchases, as indicated by a study from the AfricaNenda Foundation. Additionally, regulators behind PayShap are working to expand the number of banks participating in the system and have announced plans to introduce new services to include local businesses in the new rail.

Recently, Multichoice, the largest paid TV provider from South Africa, has integrated PayShap into their checkout, one of the first merchants to go live with it.

However, according to PCMI, PayShap is still in its baby steps for online transactions, representing a negligible share of digital commerce. “It hasn’t caught on yet, since account-based transfers are already common and easily accessible through banking mobile apps in South Africa,” says Lindsay Lehr, Managing Director at PCMI. “So far, PayShap is used for P2P and informal commerce, but sparingly, compared to other account-based transfer mechanisms, mostly because it hasn’t been heavily marketed and there are acceptable alternatives.”