Unified Payments Interface (UPI) has crossed 20 billion monthly transactions, signaling the scale and speed at which India’s digital payments ecosystem is expanding. As the government targets 1 billion daily transactions, the focus shifts to how banks can strengthen infrastructure resilience, manage real-time processing demands, and ensure long-term sustainability. In an interaction with Tech Achieve Media, Mehul Mistry, Senior Vice President – Customer Success, Growth, and Strategy for India at Zeta, discusses the opportunities and challenges this growth presents for banks, and the innovations that could shape the future of digital payments.
TAM: With UPI crossing 20 billion monthly transactions and moving toward the government’s 1 billion daily transaction goal, what does this scale mean for banks in terms of infrastructure resilience, real-time processing, and long-term sustainability?
Mehul Mistry: UPI’s 20+ billion monthly transactions highlight the urgent need for banks to strengthen infrastructure resilience, ensuring 24×7 uptime, fraud management, and seamless scalability. Real-time processing at this scale requires modern, cloud-native cores and AI-driven monitoring systems to prevent latency or downtime. Long-term sustainability lies in balancing operational efficiency with investment in modular, future-proof architectures that can absorb exponential growth without compromising security or customer experience.
TAM: Merchant payments now account for 62% of UPI volumes, yet monetization remains a challenge for banks. In your view, how can banks capture this opportunity without relying solely on the MDR model?
Mehul Mistry: To monetize merchant payments beyond MDR, banks can explore value-added services such as embedded credit, loyalty integrations, cash-flow analytics, and working capital solutions for SMEs. Secondly by leveraging transaction data to offer hyper-personalized financial products, banks can deepen relationships with merchants and customers while creating new revenue streams that strengthen their role as the primary financial partner.
TAM: Zeta’s eBook outlines UPI-centric innovations such as Credit-on-Tap and Smart QR with multi-account settlement. Which of these do you believe has the potential to become a game-changer for banks in reclaiming customer primacy?
Mehul Mistry: Among UPI-centric innovations, Credit-on-Tap has the potential to be a game-changer, as it embeds instant, contextual credit into day-to-day payments, bridging consumption with affordability while driving banks’ lending revenues. When combined with Smart QR’s multi-account settlement, it allows banks to re-anchor customers to their platforms, creating stickiness and ensuring that value-added services are routed through the bank’s ecosystem rather than third-party apps.
TAM: Globally, UPI is poised to surpass even Visa in transaction volumes. What lessons can international banking ecosystems draw from India’s UPI journey, and where do you see opportunities for cross-border adoption or collaboration?
Mehul Mistry: The UPI story offers global ecosystems lessons in interoperability, regulatory innovation, and large population scale implementation. For international adoption, opportunities lie in cross-border remittances, where UPI can provide a low-cost, real-time alternative to legacy rails, and in bilateral tie-ups with nations looking to modernize their retail payment infrastructure. By adopting India’s open yet secure framework, other markets can leapfrog traditional card-based ecosystems toward inclusive digital payments.
TAM: The transition from legacy batch cores to cloud-native, modular stacks is often cited as essential for handling UPI-scale growth. What are the key roadblocks preventing banks from making this shift, and how can they overcome them?
Mehul Mistry: Key roadblocks to moving from batch cores to cloud-native stacks include high migration costs, regulatory uncertainty, and fear of operational disruption. To overcome these, banks must adopt a phased modernization approach, decoupling customer-facing layers first, embracing API-first middleware, and partnering with fintechs for modular upgrades. A strong change management strategy, regulatory alignment, and demonstrable ROI on cloud adoption are crucial to accelerate this transition.
TAM: As consumer trust becomes a competitive differentiator, how can banks leverage privacy-first innovations and their regulatory advantage to strengthen engagement against fintech challengers in the UPI-led payments landscape?
Mehul Mistry: Banks can strengthen consumer trust by embedding privacy-by-design into their digital offerings, ensuring transparency in data usage, and differentiating themselves from fintechs through regulatory credibility. By combining robust security with personalized services, such as consent-driven data sharing, AI-led financial wellness tools, and fraud-protected digital wallets, banks can position themselves as safe yet innovative partners, thereby deepening engagement and loyalty in the UPI ecosystem.
