India’s digital payments revolution has made transferring money almost effortless, with the Unified Payments Interface (UPI) now handling close to a billion transactions a day. However, behind every seamless payment lies a complex network of institutions, technology, infrastructure and business models. In the latest episode of WTF is Payments, entrepreneur Nikhil Kamath brings together key figures from India's digital payments industry to examine who powers the system, how it operates and what could shape its future.
The discussion features Sohini Rajola, Executive Director, Growth at the National Payments Corporation of India (NPCI), the organisation behind UPI; Harshil Mathur, Co-founder and CEO of Razorpay, a payment aggregator and merchant interface; and Sameer Nigam, Founder and CEO of PhonePe, a payment application and consumer-facing platform. The conversation examines everything from the mechanics of a UPI transaction and the economics of free digital payments to regulatory challenges and emerging opportunities for entrepreneurs.
Mathur recalls how his difficulty in collecting money online for a side project helped inspire the idea behind Razorpay. At the time, he was repeatedly advised to collect cash instead. “It didn’t make sense to me that something digital is harder to do than something physical,” he says.
Nigam shares his experience of working at Flipkart during its first Big Billion Day sale, when approximately 10 million card payment attempts were made within eight hours, of which around 9 million failed. Some customers experienced failures even after money had already been deducted from their accounts.
According to Nigam, UPI addressed many of these problems for consumers and was developed more quietly than commonly assumed, with a team of perhaps 20 people. Behind every apparently effortless transfer, however, are approximately ten API calls, real-time fraud checks and interbank settlements managed by NPCI ten times a day.
One of the most contentious discussions centres on market share restrictions in the UPI ecosystem. PhonePe and Google Pay together account for around 80% of UPI transaction volume, bringing the conversation to NPCI's 30% volume cap on third-party UPI applications and the reasoning behind the restriction.
The debate highlights the challenge of balancing consumer choice with competition and the long-term health of the digital payments ecosystem. The central question is whether an application should be required to limit its growth when customers continue choosing it. Nigam argues for allowing market forces to determine consumer preferences, while Mathur and Rajola discuss the importance of maintaining a broad base of participants in the ecosystem.
Kamath also draws on his own experience with regulatory market share restrictions. Zerodha once reached a regulatory cap and subsequently saw clients move to smaller brokerage firms. Although he opposed the restriction at the time, he believes it may have benefited the wider ecosystem in the long run.
Artificial intelligence and agent-led payments emerge as another major subject of disagreement. Nigam remains unconvinced that the economics of AI agents are viable at present, while Mathur expects the cost of running AI models to continue declining.
Mathur identifies an opportunity in developing AI agents that communicate in users' preferred languages. Millions of people continue to book travel and purchase insurance through local agents because existing applications do not adequately serve their language needs. NPCI, meanwhile, is working on ways to enable agent-led payments through UPI while ensuring interoperability across applications.
Data shared during the discussion also challenges some assumptions about India's digital economy. Tier 2 towns and smaller locations have consistently accounted for 65% to 70% of digital money movement, with a substantial share of transactions taking place between villages. Online shopping, by comparison, continues to be driven by a relatively small group of consumers.
Nigam also shares PhonePe's observations following the recent GST changes. In categories where GST rates fell by 2%, spending increased by 5.5% to 6%. Where rates declined by 5%, spending rose by 13%, while spending showed little movement in categories where tax rates remained unchanged.
The discussion then shifts to emerging businesses attempting to address gaps in the next phase of digital payments.
PayGlocal Co-founder and CTO Yogesh Lokhande explains why cross-border card payments frequently fail, with different banks interpreting the same transaction in different ways. His Co-founder and CEO, Prachi Dharani, highlights how Indian brands are expanding internationally without an Indian payments company of sufficient scale to support their global ambitions.
Dodo Payments Co-founder and CPTO Ayush Agarwal explains how a merchant of record model enables a developer in Indore to sell a USD 20 subscription to a customer in Berlin without independently establishing an international payments infrastructure. Agarwal also reveals that almost all of Dodo Payments' code is now written using AI.
Seven Founder and CEO Vijay Khubchandani, whose 7 Ring was developed in collaboration with RuPay, believes QR codes may not represent the final stage of payment technology. As soundboxes and smartphones begin supporting tap-to-pay transactions, he expects the number of NFC touchpoints to increase from around 1 crore to 4 or 5 crore. He anticipates that payments will become “invisible over time”.
The conversation concludes with opportunities that extend beyond developing another payment application. Potential areas include tools to help small retailers manage 70 to 80 distributors and reconcile invoices, GST and TDS manually; simpler tipping options in a UPI-driven economy; escrow-style payments for first-time online shoppers; cross-border payment solutions for medical travellers; and access to formal credit for individuals whose digital payment histories can now provide financial records.
The participants also discuss the importance of responsible entrepreneurship and regulatory compliance. Dharani says many young founders focus on finding grey areas in regulations rather than understanding their underlying intent, stressing that compliance cannot be treated as an afterthought.
Lokhande reinforces the importance of credibility in the sector, describing payments as “a business of trust”.
The episode is available now on YouTube.
People by WTF is a global podcast platform hosted by Nikhil Kamath. It features in-depth conversations with leaders from business, policy, technology, culture and academia, examining long-term institutional, technological and economic questions shaping global society through candid discussions.
Previous guests have included Elon Musk, Prime Minister Narendra Modi, Bill Gates, Ajay Banga, Martin Escobari, Rishi Sunak, Akshata Murty and Ranbir Kapoor.
The episode also features detailed profiles of the participants and their organisations.
Sohini Rajola is Executive Director, Growth at NPCI, the organisation behind UPI. NPCI was established by the Reserve Bank of India and the Indian Banks' Association as a not-for-profit organisation, with initial funding of Rs 100 crore from ten banks. Before joining NPCI, Rajola spent around 18 years at Axis Bank, working across payments, digital initiatives and new business developments. She subsequently worked at Western Union in cross-border money transfers.
Harshil Mathur co-founded Razorpay with Shashank Kumar and serves as its CEO. His experience of struggling to collect online payments for a side project helped spark the company's creation. Razorpay provides businesses with services covering payments, cross-border collections, connected banking, payroll and vendor payments.
Sameer Nigam is the Founder and CEO of PhonePe, which he established with Rahul Chari. Before launching PhonePe, Nigam founded digital music company Mime360, which was acquired by Flipkart in 2011. He subsequently led checkout and payments at Flipkart, including during the company's first Big Billion Day sale.
Prachi Dharani and Yogesh Lokhande are the Co-founder and CEO, and Co-founder and CTO, respectively, of PayGlocal, a cross-border payments company. The platform helps Indian merchants, exporters and freelancers receive payments from international customers while enabling global merchants to accept UPI and local payment methods from Indian consumers.
Ayush Agarwal is Co-founder and CPTO of Dodo Payments, a merchant of record platform that enables digital businesses to sell internationally by managing payments, taxes and invoicing across countries.
Vijay Khubchandani is Founder and CEO of Seven, which launched India's first payment wearable, the 7 Ring, an NFC-enabled payment ring developed in collaboration with RuPay.
The discussion covers the mechanics and costs of UPI transactions, the economics of digital payments, competition and market share restrictions, consumer choice, digital payment trends in smaller towns, spending patterns following GST reductions, cross-border payment infrastructure, merchant of record models, NFC wearables, AI agents and agent-led payments.
It also examines emerging business opportunities in B2B payments, digital tipping, escrow services, medical travel payments and access to formal credit, while emphasising the importance of compliance, consumer protection and trust in building sustainable payment businesses.
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