Prabowo Widodo
India’s digital payment ecosystem, spearheaded by the Unified Payment Interface (UPI), has demonstrated exponential growth, establishing itself as a global benchmark for real-time retail transactions. With daily transaction volumes now exceeding 750 million, the National Payments Corporation of India (NPCI), the architect and operator of UPI, has set an ambitious target: to achieve over a billion daily transactions. Dilip Asbe, MD and CEO of NPCI, firmly believes that Artificial Intelligence (AI) will be the pivotal force driving this next phase of expansion, particularly in areas of user acquisition, robust fraud prevention, and equitable credit distribution. This strategic pivot towards AI was a central theme of discussions at Mumbai Tech Week (MTW) 2026, where Asbe outlined the collaborative vision for India’s digital future.
UPI’s Ascendancy and the Billion-Transaction Horizon
Launched in 2016, UPI rapidly transformed India’s financial landscape, democratizing digital payments and fostering unprecedented financial inclusion. From its humble beginnings, UPI has scaled dramatically, facilitating billions of transactions worth trillions of rupees monthly. In March 2024, UPI processed over 13.44 billion transactions, amounting to ₹19.78 trillion (approximately $237 billion), underscoring its profound impact on daily commerce. This meteoric rise has positioned India at the forefront of the global fintech revolution, attracting international acclaim and inspiring similar digital public infrastructure initiatives worldwide. The target of one billion daily transactions is not merely a quantitative goal but a testament to India’s aspiration to build a truly cashless and digitally empowered society.
During an insightful interview with TechCrunch at Mumbai Tech Week (MTW) 2026, a premier platform convening technology leaders, innovators, and policymakers to chart the course of India’s digital future, Asbe articulated how AI would be instrumental in reaching the next half a billion users. This ambitious endeavor, he stressed, would necessitate a concerted effort involving NPCI, the Reserve Bank of India (RBI), and various governmental bodies, emphasizing a holistic, ecosystem-wide approach. MTW 2026 served as a crucial backdrop for these discussions, highlighting the convergence of policy, technology, and industry vision in shaping India’s digital economy.
AI as the Catalyst for Growth, Security, and Inclusion
Asbe detailed a comprehensive strategy for integrating AI across the entire UPI value chain, from onboarding new users to enhancing security and expanding financial services. "AI will be used very effectively when we look at the next wave of UPI, and that includes all aspects, including reaching new users," he stated. This vision extends beyond mere transactional efficiency, touching upon critical socio-economic objectives.
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Reaching New Users through Voice and Multilingual AI: India’s linguistic diversity and varying levels of digital literacy present unique challenges and opportunities for user acquisition. Asbe emphasized the need to leverage AI for "voice and multilingual solutions to make onboarding simpler." Traditional text-based interfaces can be a barrier for many, particularly in rural areas or for individuals less accustomed to smartphone interactions. AI-powered voice assistants, capable of understanding and responding in multiple Indian languages, could significantly lower the entry barrier, making UPI accessible to millions who are currently underserved. While many companies have explored voice as an interface for interacting with systems, Asbe acknowledged that it is still in its nascent stages, requiring more accurate voice models. NPCI’s own "Hello! UPI," a voice assistant-based interactive system launched in 2023, is an early step in this direction. Despite its current limited adoption, Asbe remains optimistic about its potential with the right use cases, believing voice can become a critical component in the payment ecosystem, particularly as AI models mature.
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Fortifying Fraud Prevention: The rapid expansion of digital payments inevitably brings increased risks of fraud. Asbe highlighted AI’s crucial role in safeguarding existing users and maintaining trust in the system. "We must use AI effectively to protect our current citizens, to find fraud, and to find mules," he asserted. AI’s ability to analyze vast datasets in real-time can detect anomalous transaction patterns, identify suspicious activities, and flag potential mule accounts – those used for money laundering. Machine learning algorithms can learn from past fraud instances, continuously improving their detection capabilities and adapting to new modus operandi employed by fraudsters, thereby offering a dynamic and robust defense mechanism. This proactive approach to security is paramount for sustaining user confidence and the overall integrity of the UPI platform.
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Democratizing Credit Distribution: Perhaps one of the most transformative applications of AI in the UPI ecosystem is in credit distribution. "AI must also be used to provide credit to all the users and merchants who have digital footprints," Asbe explained. In a country where a significant portion of the population remains outside the formal credit system due to a lack of traditional credit history, UPI transaction data represents a rich, untapped resource. AI models can analyze these digital footprints – including frequency, volume, and type of transactions – to assess creditworthiness, enabling financial institutions to offer tailored micro-loans and working capital to individuals and small businesses. This has the potential to unlock economic growth, foster entrepreneurship, and further financial inclusion by extending credit to segments historically deemed unbankable.
AI in Finance: Balancing Innovation with Robust Regulations
The integration of AI into financial services is a global phenomenon. In the U.S., startups and established public companies like Coinbase and Robinhood are experimenting with AI agents for trading on users’ behalf, while platforms like OpenAI allow users to load personal financial data for advice. NPCI itself has showcased demos of "agentic commerce and payments" in collaboration with Razorpay, indicating a proactive exploration of these advanced capabilities within the Indian context. However, a wider rollout of such features has been cautiously approached.
NPCI’s CEO underscored the critical importance of a strong regulatory framework to ensure responsible AI adoption in finance. He advocated for "robust regulations and a framework" to enable India to embrace AI-powered finance while safeguarding user interests. Key considerations include ensuring "enough protection for users and mitigation for risk." Furthermore, in scenarios where AI agents might err, Asbe stressed that the system must be capable of tracing back to the "instructions and consent given by the user to an agent." This emphasis on transparency, accountability, and explicit user consent aligns with India’s broader regulatory philosophy, which prioritizes consumer protection and data privacy in its digital public infrastructure initiatives. The Reserve Bank of India (RBI) is expected to play a crucial role in formulating these AI governance guidelines, ensuring that innovation does not come at the expense of financial stability or consumer trust.
The ‘Made in India’ LLM Opportunity
Beyond simply utilizing existing AI models, Asbe sees a significant opportunity for the Indian finance ecosystem to develop its own specialized Small Language Models (SLMs). "We believe that the models will differentiate from each other based on the data sets that are made available to them," he noted. India’s vast and diverse digital payment data, coupled with its unique linguistic and socio-economic context, provides an unparalleled foundation for training highly specific and effective AI models.
"We have a very rich data set in our ecosystem. I think there is a big opportunity for Indian companies – the banks, FinTechs, and the ecosystem – to create small language models which are sharp, specific, and as deterministic as possible," Asbe elaborated. Unlike general-purpose large language models (LLMs) that require massive computational power and extensive training, SLMs can be tailored for specific tasks, making them more efficient, secure, and potentially more accurate for particular financial applications. This strategy could lead to the development of localized AI solutions that better understand the nuances of Indian financial behavior and language.
A notable example of this approach is NPCI’s launch of FIMI (Financial Intelligent Messaging Interface) in 2023, an AI language model specifically designed to resolve user disputes within the payment ecosystem. Asbe proudly shared that FIMI is already serving over a million users, efficiently canceling mandates and resolving various issues, and is scaling rapidly. This success story demonstrates the tangible benefits of developing domain-specific AI models tailored to the Indian context, providing a blueprint for future innovations.
Navigating the Competitive Landscape of UPI
While UPI’s growth has been phenomenal, the competitive landscape among UPI apps remains a significant area of focus for NPCI. The regulator has long championed "healthy competition" among UPI applications to foster innovation and prevent market concentration. However, current data indicates a high level of consolidation, with Walmart-owned PhonePe and Google Pay collectively holding over 80% of the market share. This dominance has raised concerns about potential monopolistic tendencies and the stifling of smaller players.
To address this, NPCI’s plan to cap an app’s market share at 30% is set to take effect on December 31, 2026. This cap, initially proposed earlier and subsequently deferred, aims to level the playing field, encourage new entrants, and diversify the ecosystem. The prospect of this deadline looms large, and stakeholders across the fintech sector are keenly watching whether the NPCI will enforce it or consider another deferral.
During the conversation, Asbe acknowledged the low switching costs between UPI apps, where most core features are standardized. He attributed the market dominance of PhonePe and Google Pay to the substantial investments they have poured into their platforms, including aggressive marketing and user incentives. However, he emphasized that the key to fostering greater competition lies in the availability of "viable commercial models" for newer players. "I believe that there are multiple issues why we see this concentration risk exist, and one of the important reasons is the availability of a viable commercial model. The moment we see the commercial model being available to the ecosystem, I believe newer players will start investing very heavily," Asbe stated. This suggests that simply capping market share without addressing the underlying economic incentives for innovation and investment might only offer a partial solution. New business models could include value-added services, enhanced merchant solutions, loyalty programs, or integration with other financial products that generate revenue beyond basic transaction processing.
In a strategic move to promote competition and offer a sovereign alternative, NPCI spun off its BHIM UPI app into a wholly-owned subsidiary, NPCI BHIM Services, in 2024. This initiative aimed to make BHIM more competitive and boost its usage. While BHIM’s transaction volume has grown, its overall market share remains around 1%. Asbe clarified that NPCI does not have a specific market share target for BHIM. Instead, the objective is to establish it as a "sovereign and secure alternative" to other apps, ensuring that a public option remains robust and available, safeguarding the resilience of the digital payment infrastructure. This move is seen as a strategic safeguard, providing a fallback and a benchmark for security and reliability within the competitive landscape.
Broader Implications and Global Outlook
India’s journey towards a billion daily UPI transactions, heavily reliant on AI innovation and a carefully calibrated regulatory environment, carries significant implications. It reinforces India’s position as one of the biggest and most dynamic digital economies globally. International investors and fintech companies are closely observing the evolving regulatory landscape, seeking opportunities to inject capital into newer fintech solutions that promise to enhance competitiveness and deepen financial inclusion. The success of India’s digital public infrastructure, particularly UPI, serves as a powerful case study for developing nations looking to leapfrog traditional financial systems. The strategic deployment of AI, balanced with robust consumer protection and a vision for equitable access to credit, could solidify India’s leadership in shaping the future of digital finance worldwide. As the nation continues to innovate, its approach to integrating cutting-edge technologies like AI into its foundational payment systems will undoubtedly influence global best practices and regulatory dialogues for years to come.
