UPI’s Business Model: The Real Truth Nobody Talks About

UPI has transformed how India pays. But according to Vivek, the biggest opportunity for banks may not lie in the payment itself - it lies in everything that happens around it.

UPI, he explains, is a public payment infrastructure, much like a highway. The highway itself may not generate revenue, but the ecosystem built around it can create significant value. Every transaction gives banks greater visibility into customer behaviour, helping them understand spending patterns and eventually offer products such as credit, cards and other financial services.

This shift also changes how banks should think about customer relationships. Rather than focusing only on building deposits and balances, banks can benefit from customers actively spending through their accounts. Vivek argues that banks were late to recognise this dynamic and that payments can help bring previously underserved segments, including SMEs, into the formal banking ecosystem.

The same long-term thinking applies to co-branded credit cards. Their initial launch can generate a strong surge in card sales, but that momentum can fade within months if brands stop innovating or reducing incentives causes customers to disengage.

For banks, the future therefore isn't simply about owning a payment transaction. It is about building the ecosystem around it- and turning payments into deeper, lasting customer relationships.

Watch full episode here: https://youtu.be/Be-AWhJ1IyU

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