India’s digital payment landscape has seen massive expansion, with the Unified Payment Interface (UPI) now processing over 750 million daily transactions. As the National Payments Corporation of India (NPCI) aims to surpass one billion daily transactions, Dilip Asbe, MD and CEO of the NPCI, anticipates that artificial intelligence will play a pivotal role in driving user growth, enhancing fraud prevention, and streamlining credit distribution.
Speaking at Mumbai Tech Week (MTW) 2026, Asbe suggested that a collaboration between the NPCI, the central bank, and the government could leverage AI to onboard the next half-billion users to the digital ecosystem.
“AI will be a highly effective tool for the next evolution of UPI, impacting everything from user acquisition to security,” Asbe stated. “We must utilize AI to protect our citizens by identifying fraud and detecting money mules. Additionally, AI can facilitate credit access for users and merchants based on their digital footprints. We also see great potential in using AI for voice and multilingual interfaces to simplify the onboarding process.”
While many industry players have identified voice as a critical interface for the Indian market, Asbe noted that the technology is still maturing and requires higher accuracy levels. Although the NPCI launched a voice assistant-based interactive system in 2023, widespread adoption is still pending. However, he remains confident that with the right use cases, voice technology will become a cornerstone of the payment ecosystem.
AI Integration in Finance and Regulation
The race to integrate AI into finance is intensifying globally. In the United States, companies like Coinbase and Robinhood have introduced AI agents capable of trading on behalf of users, while OpenAI allows users to utilize personal financial data within ChatGPT for advisory services. While the NPCI demonstrated concepts related to agentic commerce and payments with Razorpay last year, a large-scale rollout has yet to occur.
Asbe believes India can successfully adopt AI-powered finance provided there is a robust regulatory framework. He emphasized the need for strong consumer protections and risk mitigation, noting that in the event of an error, systems must be able to audit the specific instructions and consents provided by a user to an AI agent.
Beyond general AI models, Asbe highlighted a significant opportunity for the Indian financial sector to develop specialized Small Language Models (SLMs).
“We believe models will differentiate themselves based on the datasets they are trained on,” he explained. “Given the incredibly rich datasets within our ecosystem, there is a massive opportunity for Indian banks, FinTechs, and other players to create small language models that are precise, specific, and highly deterministic.”
The NPCI has already seen success with AI implementation; last year, it launched the FIMI model to manage user disputes. Asbe noted that FIMI is currently scaling rapidly, assisting over a million users with mandate cancellations and issue resolutions.
The Competitive Landscape of UPI
While the NPCI encourages healthy competition among UPI applications, current data shows a market dominated by Walmart-owned PhonePe and Google Pay, which together hold over 80% of the market share. To address this, regulators plan to implement a 30% market share cap per app by December 31, 2026, pending any potential deadline extensions.
Asbe observed that UPI applications currently face low switching costs and offer largely similar core features. He acknowledged that PhonePe and Google have invested heavily to secure their dominance, but suggested that new players could gain ground if they establish viable business models within the FinTech ecosystem.
“The current market concentration is largely due to the lack of a sustainable commercial model for many players,” Asbe said. “Once a viable commercial model becomes available, I expect new entrants to invest aggressively.”
In 2024, the NPCI spun off its BHIM UPI app to boost its competitiveness. Although its transaction volumes are increasing, its market share remains around 1%. Asbe clarified that the NPCI does not have a specific market share target for BHIM; rather, the goal is to provide a secure, sovereign alternative to existing platforms.
As one of the world’s largest digital economies, India’s regulatory trajectory will be closely watched by global investors looking to fund the next generation of competitive FinTech solutions.
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