UPI: Anatomy of a Payment Transaction Reveals the Hidden Chain
I trace the invisible journey of a UPI payment, from scanning a QR code to the green tick. While apps like PhonePe and Google Pay dominate the interface, the real work happens behind the scenes. I explain how your sponsor bank signs the request, how the NPCI switch routes it, and why money always leaves your account before it arrives at the recipient's. This process, handling billions of transactions, relies on a precise handover between organizations you never see.
The money always leaves before it arrives, never the other way round.
- brainless
For those outside India and/or non-active users of UPI - it drives so many transactions that even for an engineer, I forget how often I use it:
- Payments between family members
- Payments for every tiny/small item - a bag a chips or a cup of tea for example
- Payments for car mechanic, plumber, or other services
- Payments for online shopping or services - yes web apps show the UPI QR code and I can pay from my phone by scanning. Mobile apps will simply open the UPI app's payment screen
- Buses, flights, trams, taxis, trains - online or on road
On an average day in a city like Kolkata, me and my partner make up to 20-30 transactions. I live in a small Himalayan village most of the year and I still make roughly 6-8 transactions a day.
- elendilm
I have the utmost respect to people who makes UPI work. Made even the old people in the nation completely go digital for payments - a feat unparalleled in the world.
- drewfax
Yes, UPI works. But it's a terrible system for privacy and autonomy. It has so many intermediaries, requires phone number and linked to person's identity. It should not be called a peer-to-peer payment system in anyway. It is controlled by the government rather than Visa or Mastercard. That's the only the difference.
- pzmarzly
22B transactions a year mean an average of ~700 QPS for the NPCI switch. Of course the traffic is not uniform, it probably peaks at many times that number, but that still doesn't sound that bad - for comparison, a quick Google tells me Nasdaq TotalView ITCH feed peaks at 100k+ QPS at market open.
- jesuswasjew
Centralized, kyced, private money transaction network. Is this something good?
- codethief
Great article. I would love to see a similar article about how POS credit card / debit card payments work in the US/Europe, depending on whether you use the card's magnet stripe, chip or your phone (Apple Pau/Google Pay/…) to pay.
- sometimes_all
The content is good, but the crore/billion toggle is fantastic. A great addition, I hope it catches on in India-specific websites.
I just wish it had a tooltip because its purpose was not immediately clear (CR/BN is a bit cryptic).
- nocoder
Question to op - Do QR based systems in other SEA countries like promptpay in Thailand also work on similar logic?
Also, great website and layout, very respectful of the reader. Clean and with zero distractions.