Dilip Asbe, the chief of India's payments empire, doesn't mince words. The man who runs the National Payments Corporation of India—the body behind the United Payments Interface—thinks artificial intelligence isn't just a buzzword for the next phase of digital payments. It's the engine.
Speaking at a fintech conference in Mumbai last week, Asbe laid out a vision that sounds more like a Silicon Valley pitch than a central banker's talking points. “AI will be deeply embedded in the next generation of UPI apps,” he said. “Not just for fraud detection or customer support—but for personalization, credit underwriting, and even creating viable commercial models.”
The revenue problem nobody solved
UPI is a paradox. It's India's most successful digital public good—processing over 10 billion transactions a month—but it's also a money pit for the companies running it. Third-party apps like PhonePe, Google Pay, and Paytm have burned billions acquiring users, only to find that transaction fees are essentially zero. The government capped merchant discount rates at zero for UPI, meaning these apps can't make money off payments themselves.
“The current model isn't sustainable,” Asbe admitted. “We've built the largest real-time payment system in the world, but the apps that made it happen are struggling to monetize.” He's right. PhonePe and Google Pay have tried lending, insurance, and even gold sales to stay afloat. But the margins are thin, and competition is brutal.
“AI will be the differentiator. The app that knows you better than you know yourself will win the next decade.” — Dilip Asbe
How AI changes the game
Asbe's argument is that AI can turn UPI from a commodity into a personalized financial assistant. Imagine an app that learns your spending patterns, predicts when you'll need a loan, and offers you credit at the exact moment you're about to run out of cash. That's not science fiction—it's already happening in small ways. Google Pay uses AI to offer “cashback on your favorite stores.” PhonePe's AI suggests insurance plans based on your transaction history.
But Asbe wants more. He envisions apps that use AI to underwrite loans in real time, using transaction data instead of credit scores. “India has hundreds of millions of people with thin credit files,” he said. “But their UPI history tells a rich story. AI can read that story and decide who gets a loan and at what rate.” That could unlock credit for a massive unbanked population—and create a revenue stream for UPI apps that takes a cut of the interest.
The privacy tightrope
Of course, all that data makes privacy advocates nervous. India's digital identity system, Aadhaar, has already faced legal challenges over data security. Adding AI to the mix—scanning every transaction, every purchase, every loan repayment—raises the stakes.
Asbe is aware of the tension. “We need to balance innovation with consent,” he said. “The data belongs to the user, not the app. AI should work for the user, not the other way around.” He pointed to the upcoming Data Protection Bill as a framework that will force apps to be transparent about how they use AI. But critics argue that enforcement is weak, and users rarely read those consent popups anyway.
“The NPCI is pushing AI without a clear privacy playbook,” said Aruna Sharma, a former IT secretary and now a digital rights activist. “They're hoping the market self-regulates. That's a dangerous bet.”
Competition heats up
Meanwhile, the race for AI supremacy in payments is already on. Walmart-owned PhonePe recently launched an AI-powered savings goal tool that analyzes spending to suggest how much to save. Google Pay's “Smart Pay” uses machine learning to remind users of recurring bills. Even WhatsApp Pay, which has struggled to gain traction, is experimenting with AI chatbots for customer service.
But the real wildcard is Jio Financial Services, the fintech arm of Reliance Industries. With access to hundreds of millions of Jio telecom users, Jio has a data advantage that few can match. They've been hiring AI engineers aggressively, and insiders say they're building a UPI app that learns from every call, text, and data session. If Jio launches that app with AI baked in, it could disrupt the entire market.
“Whoever owns the AI layer will own the payment layer,” said Amrit Singh, an analyst at Redseer. “UPI is the rails, but AI is the engine. And the engine is where the value will be.”
The next billion users
Asbe's vision isn't just about making existing apps profitable. It's about bringing the next billion Indians into the digital payments ecosystem. Right now, UPI is a urban phenomenon. Rural adoption lags, partly because many feature phone users can't access UPI apps, and partly because the apps aren't tailored to their needs.
AI can help there too. Voice-based interfaces, already popular in Hindi and other regional languages, could become smarter with AI. An app that understands a farmer's dialect and predicts his crop cycle payments, or a gig-worker's app that offers micro-loans against future earnings—these are the use cases Asbe is betting on.
“The next 500 million users will not use a keyboard,” he said. “They will speak, and AI will understand. That's the only way to make UPI truly universal.”
It's a bold promise, and India's track record with digital inclusion is mixed. Aadhaar brought IDs to millions but also raised exclusion fears. UPI brought payments to everyone with a smartphone, but left feature phone users behind. AI could bridge that gap—or widen it, if it's built only for English-speaking, urban users.
Asbe didn't offer a timeline for this AI-driven future. But the message was clear: the days of dumb payment apps are numbered. The next generation will think, learn, and adapt. And those that don't will be left behind.
The question is whether India's regulators and companies can build an AI-powered payment system that's inclusive, profitable, and private. Asbe thinks they can. History suggests the road will be bumpy. But if anyone can pull it off, it's the team that turned UPI into the world's most successful real-time payment system.
Just don't expect them to do it without controversy.
