Unified Payment Interface(UPI) Architecture

Aditya Roshan
3 min readJul 1, 2023

In the digital age, where convenience and speed are very very important, the Unified Payments Interface (UPI) has emerged as a game-changer in the realm of financial transactions in India. UPI, introduced by the National Payments Corporation of India (NPCI), has revolutionized the way people send and receive money, making it as simple as a few taps on their smartphones. With its seamless integration across multiple banking platforms and widespread adoption by various payment apps, UPI has become the go-to solution for instant, secure, and cashless transactions.

In this tech blog, we will delve into the world of UPI and explore its inner workings, advantages, and the impact it has had on the Indian digital payments landscape. Whether you are a tech enthusiast, a curious user, or a business owner looking to embrace UPI for your enterprise, this comprehensive guide will provide you with the insights you need to navigate the exciting world of UPI.

Transactions stats for Year 2023:

Transactions in Million

If you compare month on month between May 2022 vs 2023 — (9415–5955/5955) * 100 ~ 59% increase, this is really huge.

9415*1000k/24*60*60*30 ~ 4k transactions/s, this is very high QPS. How does UPI system is able to handle such load?

First let’s start with the basic flow diagram of any UPI transaction and later we will deep dive into the detailed architecture of it.

UPI high level transaction flow

Here are the entities involved in above transaction:

  1. User :Initiates a transaction for another UPI ID after login to his/her PSP app account.
  2. PSP — Payer: Validate the user(with the help of NPCI) and forwards request to NPCI for the further processing of the transaction.
  3. NPCI UPI ecosystem: Forwards the request to PSP(Payee) for further address resolution and processing.
  4. PSP — Payee: Uses NPCI APIs to find out the account details/address of the Payer’s bank/Remitter Bank.
  5. Remitter Bank: Validate and confirms the account deduction request raised by the Beneficiary Bank. Sends the confirmation back to NPCI.
  6. Beneficiary Bank: Validate and confirms the account credit request raised by the Remitter Bank. Sends the confirmation back to NPCI.

Finally NPCI notifies about the successful or failed transaction request back to all involved PSP. This notification may be push/pull type based on the configuration.

References:

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Aditya Roshan

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