UPI at 10: How India’s payment revolution strengthens national security

Ten years ago, the idea of paying a roadside tea seller, an auto-rickshaw driver or a vegetable vendor by scanning a QR code would have seemed extraordinary. Today, it is routine. Few transformations better capture the scale and speed of India’s digital revolution than the success of the Unified Payments Interface (UPI).

Introduced in 2016, UPI created an interoperable system allowing different banks and payment applications to operate over common infrastructure. According to the Ministry of Finance, annual UPI transaction volume rose from about 2 crore in FY 2016-17 to more than 24,162 crore in FY 2025-26. At this scale, UPI is no longer simply a convenient way to pay. It is critical economic infrastructure — and infrastructure which is relied upon by hundreds of millions of citizens inevitably acquires strategic importance.

One important consequence of digital payments is greater financial traceability. Cash transactions can leave little record; digital payments create an electronic trail. As legitimate commerce enters formal payment channels, economic activity becomes more transparent. Criminal networks will adapt, as they always have. But greater formalisation makes parts of the economy less opaque and strengthens the ability of authorised institutions to identify suspicious financial patterns.

UPI is also part of a wider transformation involving bank accounts, digital identity and Direct Benefit Transfers. Together, these systems have reduced dependence on intermediaries, improved accountability and connected citizens more directly with the formal economy. This reflects a distinctive strength of India’s digital-governance model: public infrastructure establishes the rails while banks and private technology companies compete and innovate upon them. The result is greater state capacity alongside wider economic participation.

This wider participation also has implications for national resilience. National security is not confined to borders, weapons and military capability. A nation’s ability to absorb shocks and keep everyday economic activity functioning is itself a source of strength. UPI has dramatically lowered barriers to digital commerce. A small merchant who could never justify installing a card machine can accept payments through a QR code linked to a bank account. Sophisticated financial technology has consequently spread far beyond large businesses and affluent urban consumers.

That matters strategically. Bringing citizens and enterprises into formal financial networks broadens economic participation. An economy in which money can move quickly and inexpensively is also better equipped to sustain everyday commerce during periods of disruption. Financial inclusion, therefore, is not solely a welfare objective. At India’s scale, it contributes to economic resilience, which in turn contributes to national power.

The strategic importance of such resilience is particularly visible in India’s wider economic performance. The economy recorded real GDP growth of 7.8 per cent in the first quarter of FY 2026-27, exceeding the Reserve Bank of India’s earlier estimate of 7 per cent despite considerable global uncertainty. Prime Minister Narendra Modi, highlighting the figures on Tuesday, described the performance as a reflection of the country’s collective strength and stressed the importance of sustaining the momentum through greater self-reliance.

The connection is significant. Economic resilience and technological sovereignty increasingly reinforce one another. A rapidly growing economy requires dependable domestic infrastructure through which citizens and businesses can transact, while systems such as UPI reduce dependence on externally governed payment networks. India’s growth story, therefore, is not simply about expanding GDP; it is also about strengthening the institutional and technological foundations capable of sustaining that growth.

Perhaps the strongest national-security argument for UPI concerns technological sovereignty. Before UPI, India’s digital-payment landscape depended more heavily on card networks and closed platforms, including infrastructure developed and governed outside the country. India instead built an interoperable domestic capability. UPI operates under the oversight of the Reserve Bank of India and through the National Payments Corporation of India. Banks and private payment applications innovate on this infrastructure while its foundation remains domestic.

This extends to the data generated by the payments ecosystem. India’s payment-data localisation framework requires domestic payments data to be stored within the country, ensuring that strategically important financial information remains accessible to Indian regulatory and supervisory authorities. In an age when data itself is a source of economic and strategic power, retaining effective jurisdiction over such information is an important dimension of technological sovereignty.

Recent geopolitical disruptions have demonstrated that technological dependence can become a strategic vulnerability. For a major economy, control over critical digital infrastructure is no longer merely a commercial consideration; it is an element of sovereignty. This need not mean technological isolation. UPI represents a more confident approach: build strong indigenous capabilities while remaining internationally engaged. Domestic control cannot automatically guarantee security. But it gives India the institutional ability to govern, strengthen and improve infrastructure according to its own requirements rather than depending entirely upon decisions taken elsewhere.

Yet greater strategic importance inevitably brings greater responsibility. The more indispensable digital payments become, the more vigorously the surrounding ecosystem must be protected. Fraudsters exploit phishing, fake customer-care numbers, malicious applications and fraudulent payment requests. Beyond individual fraud lies a broader strategic challenge: digital payments depend upon banks, telecom networks, data centres, payment providers and technology companies.

Continued investment in cybersecurity, redundancy and continuity planning is therefore essential. Payment services must be capable of withstanding attacks, recovering rapidly and continuing to function under severe stress.

UPI’s second decade should build on existing safeguards through frequent security audits, realistic cyberattack simulations, faster sharing of threat intelligence and geographically separated backups. Citizens are another line of defence. Even sophisticated infrastructure can be undermined when users are deceived. Awareness about UPI PINs, impersonation, fraudulent requests and suspicious links is therefore part of national cyber resilience.

UPI was not conceived as a national-security system. It was designed to make payments faster, simpler and interoperable. Yet when hundreds of millions of citizens and businesses depend upon an infrastructure, its significance inevitably changes. UPI’s first decade demonstrated India’s capacity to conceive, build and govern critical digital infrastructure at extraordinary scale. Its second decade must secure that achievement. A payment system that is inclusive, resilient and governed at home is more than an economic convenience. It is an expression of technological sovereignty — and an increasingly important source of Indian national strength.

The author is a research fellow at India Foundation, working on national security, internal security, governance and development; Views presented are personal.