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How UPI Has Shaped the Spending Landscape in India



When was the last time you thought to check your wallet for cash before stepping out of your house? Or thought to carry “at least ₹500 in case of emergencies”? 


We are willing to bet that it doesn’t happen often. In fact, if you live with your parents, you are sure to have heard these reminders before you’re off on your merry way. Much to their dismay, the Millennial and Gen Z generations are fairly confident in relying on their smartphones and smart apps when they have to spend any money.


There is clearly an evolution in how our parents’ generation was spending, and how the younger generations today are spending. How has this change in perspective emerged? The answer is simple – three little letters – U.P.I. 


So we thought we’d equip you with some key information about UPI and how it has played a monumental role in the way Millennials and Gen Z are spending. 


Let’s start with the basics and break down the fundamentals – What is UPI? 


UPI stands for Unified Payments Interface. In straightforward terms, it is a payment system that allows users to transfer money in a single and straightforward transaction, using any of the (many!) fintech applications equipped with UPI.

UPI was developed by the National Payments Corporation of India (NCPI).

RBI Governor Raghuram Rajan set it up in 2016.


It is worth noting that in a short span of 6 years, UPI has become an invaluable asset in the fintech space and for young spenders today.


It has come to be an effective, easy, and necessary development in the world of finance for individuals. Not to put too fine a point on it – but as things stand today, UPI has become one of the safest ways to carry out cashless transactions. 


In fact, a recent survey found that 76% of Indians are more likely to use UPI payments for online checkouts, and 84% of Millennials are using only UPI to carry out online transactions (Business Standard). This is primarily because customers today want a seamless shopping experience (and saving experience… and investing experience!). That’s not to say that our parents did not – but it goes to show that the developments in the field of finance and fintech are actually influencing how we spend today! 


Bonus interesting fact – The ready adoption of UPI and other real-time payments has saved Indian businesses and consumers over $12 billion in transaction costs and has unlocked over $16 billion of the Indian GDP (Outlook). Just think of the savings!!! 


Look, the bottom line is this – carrying a bit of cash is always a good idea and is sound advice from your parents. It is especially useful to heed this advice when that phone network ditches you or you find a vendor who doesn’t have a UPI payment set-up. Further, UPI is a bit restrictive as of now, as there are so many areas in India that will not have regular access to the internet and may even see an absence of smartphones, which is a huge obstacle in the fintech industry today. 


But it helps to know that for the few challenges still in the path of UPI, its overall ease of use and benefits are good enough that most people are confident in UPI that they are forgoing carrying around that cash (read: security blanket) without any hesitation.


Millennials grew up with the boom of technology and digitization, and Gen Z never knew of a world without it – whereas, our parents’ generation was a bit wearier about the use of technology, especially when it came to financial undertakings. This, coupled with the emergence of fintech and so many auxiliary financial solutions right at your fingertips – it’s no wonder UPI has been a game-changer for how people are spending today. While it is a work in progress, the future of UPI is bright! The UPI industry is poised for improvements owing to digital wallets, UPI use for tolls and cross-border transactions, and even employing the right kind of talent in fintech firms. With the expansion of UPI operations, and more and more users opting for such transitions the scope of UPI is on a steady rise.


There will always be developments in the world of finance and fintech – some that are not that great, and some that will become a routine part of our financial endeavors. UPI falls in the latter category – it is a useful development that is here to stay!


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