As Seen on TechCrunch: Finofo Raises $1.65M CAD!
Payment Rail Systems

The Story of UPI: A New Era in Indian Transactions

Photo by ' Joshua Olsen' from Unsplash


Unified Payments Interface (UPI) represents a significant breakthrough in digital payment technology in India. As a system that enables instant money transfers through mobile devices, UPI has radically transformed the way Indians transact. This innovative platform allows users to link multiple bank accounts into a single mobile application, simplifying and securing various banking features.

History of UPI

Launched in 2016 by the National Payments Corporation of India (NPCI), UPI was developed as part of India's initiative to increase digital financial inclusion. The system was designed to consolidate and integrate several banking features, enabling seamless fund routing and merchant payments under one umbrella. UPI quickly gained popularity due to its simplicity, security, and speed, revolutionizing the digital payments landscape in India. It allowed users to instantly transfer money between bank accounts using a unique identifier like a mobile number or virtual payment address.

Business Example of Using UPI

Imagine 'SpiceCraft', an Indian gourmet food company based in Mumbai, needs to make an urgent payment of ₹50,000 to 'FreshProduce Suppliers', a key vendor in Pune. SpiceCraft has its account with HDFC Bank, while FreshProduce Suppliers banks with ICICI Bank.

Benefits & Limitations of UPI

Costs Involved in the Transfer Process

One of the key advantages of UPI is its cost-effectiveness. For users, most UPI transactions are free of charge, making it an affordable option compared to traditional bank transfers and other digital payment methods. However, there are proposals to introduce minimal charges for UPI transactions by some banks, which could impact its cost advantage. For businesses using UPI for receiving payments, there may be nominal merchant discount rates (MDR) charged by some payment service providers, although this is typically lower than the charges for credit card transactions.

Timelines for the Transfer

UPI transactions are known for their speed, with most transfers being completed almost instantaneously. The real-time processing of payments is one of UPI's standout features, facilitating quick and efficient money transfers. Transactions are typically processed within a few seconds, making UPI an ideal solution for time-sensitive payments. This immediacy is beneficial for both personal and business transactions, ensuring swift movement of funds without the delays commonly associated with traditional banking methods.


As India continues to surge in the global economy, its affordable labor and readily available raw materials are increasingly sought after by businesses worldwide. If you're operating without a physical entity in India but need to utilize local payment rails for transactions with Indian suppliers and vendors, Finofo offers a seamless solution. By setting up a free account with Finofo, you can effortlessly engage in the Indian market as a local player, enhancing your vendor relationships and solidifying your business presence in this economically booming nation.

Karthikeyan Sundaram