India Prepares Rollout of Agentic Payments Framework on UPI

India is preparing a framework that will allow AI agents to make small digital payments without requiring approval for every individual transaction, according to sources familiar with the matter. This development could position the Unified Payments Interface (UPI) among the world's first national infrastructures to support agentic AI payments.

The Unified Agent Protocol is likely to be unveiled at the Global Fintech Fest in Mumbai. While leading payment companies have previously launched similar frameworks in regions such as the U.S., Europe, Singapore, and Australia, a rollout on UPI would integrate these capabilities into a national retail fast-payment network.

Operated by the National Payments Corporation of India (NPCI), UPI is the world's largest retail fast-payment system by transaction volume, according to a 2025 IMF report. The platform recorded 24.51 billion transactions worth ₹29.82 lakh crore in August, with Google Pay and Walmart's PhonePe accounting for approximately three-fourths of monthly transaction volumes. The NPCI did not immediately respond to queries seeking comment on the upcoming rollout.

According to sources, low-value and frequent purchases such as groceries are expected to be among the initial use cases, positioning e-commerce platforms to capture early demand. The NPCI anticipates that use cases will eventually expand to include more sophisticated transactions, such as AI agents placing orders based on sale offers and discounts, or making investments according to specified instructions regarding price thresholds.

The protocol is expected to rely on two existing UPI mechanisms. These include UPI Circle, which allows a primary account holder to delegate payment authority to a secondary user like an AI agent, and Reserve Pay, which enables customers to block funds for multiple debits. Currently, banks cap such blocks at ₹10,000 for up to 90 days, though this limit and its validity may be reviewed for agentic use.

Under the planned infrastructure, the NPCI is expected to offer merchants a way to integrate directly, allowing customers to set rule-based instructions for AI agents regarding timing and payment amounts, backed by spending limits, audit trails, and identity checks. Sources indicated that the NPCI also plans to establish a liability framework, though specific details have not yet been provided.

Meanwhile, other financial networks and firms are also developing agentic capabilities in the Indian market. Global card networks Mastercard and Visa are separately building similar payment features to support AI-driven commerce. Mastercard completed its first authenticated agentic transaction in New Delhi in June. Additionally, fintech firm Pine Labs launched its own agentic protocol, P3P, earlier this year to enable AI agents to complete UPI payments following a single upfront authorization.

"The integration of agentic AI payments into UPI marks a significant evolution in digital commerce and consumer fintech. By enabling automated, rule-based micro-transactions through established mechanisms like UPI Circle and Reserve Pay, India is building a scalable foundation for AI-driven transactions. For startups and e-commerce platforms, this shift presents new opportunities to streamline user experiences and capture early demand in automated retail. However, maintaining strict security, clear spending limits, and a robust liability framework will be essential as these automated capabilities expand into more complex financial activities." — Dr. Shishir Gupta, Founder & CEO, StartupLanes