UPI Tap and Pay explained: How it works, key features, and its benefits

Digital payments are getting a new option. Here's what RBI's new UPI Tap and Pay feature is all about, how it works and what it could mean for users:

The Unified Payments Interface (UPI) is set to become more convenient for users making payments at physical stores with the introduction of a new 'Tap and Pay' facility. Announced by Reserve Bank of India (RBI) Governor Sanjay Malhotra at the Global Fintech Fest 2026, the feature will allow users to make UPI payments by simply tapping an NFC-enabled smartphone on a compatible point-of-sale (PoS) terminal.

 

The RBI also announced other additions to the UPI ecosystem, including MyUPI, an AI-powered customer support platform, along with new features aimed at improving payment security and user control.

 

What is UPI Tap and Pay?

 

UPI Tap and Pay is a contactless payment facility that allows users to make a UPI payment by tapping their compatible smartphone on a point-of-sale (PoS) terminal.

 

 

The feature uses near-field communication (NFC) technology, which enables two devices placed close to each other to exchange information wirelessly. The technology is already widely used for contactless card payments.

 

With the new facility, users will be able to make payments at compatible PoS terminals without having to scan a QR code or enter payment details manually.

 

How does UPI Tap and Pay work?

 

To use the facility, a user needs an NFC-enabled smartphone and a compatible PoS terminal at the merchant's outlet. The user can unlock the smartphone and tap it against the PoS terminal. The payment is then processed through the terminal's internet connection.

 

This means the user's phone does not necessarily need an active mobile data connection at the time of the transaction. The facility supports different types of accounts, including regular UPI-linked accounts and RuPay credit cards linked to UPI.

 

For transactions of up to ₹5,000, users can make payments without entering their UPI PIN. For amounts above ₹5,000, the user will have to enter the UPI PIN on the PoS terminal.

 

What are the benefits of UPI Tap and Pay?

 

The biggest advantage is convenience. Instead of opening a UPI app, scanning a QR code and completing the payment process, users can tap their phones on a compatible terminal.

 

The feature could also be useful when a user's mobile phone does not have network connectivity. Since the transaction can be processed through the PoS terminal's internet connection, users may be able to make payments even without mobile data on their phone.

 

The facility could also make UPI payments more similar to contactless card transactions, while allowing users to continue using their existing UPI-linked accounts. However, the facility will depend on both the smartphone and the merchant's PoS terminal supporting NFC and the new payment functionality.

 

What is MyUPI and how will it help users?

 

Alongside Tap and Pay, the RBI has introduced MyUPI, a platform developed by the National Payments Corporation of India (NPCI) and powered by its Finance Model for India (FiMI) small language model.

 

MyUPI is designed to provide users with a single view of their UPI transactions and AutoPay mandates across different banks and UPI applications.

 

The platform also aims to give users greater control over their payments. Its 'Safety Switch' will allow users to request that UPI debit transactions be declined if they suspect their account has been compromised.

 

Another feature, UPI Number Delink, will allow users to stop receiving UPI payments through their mobile number.

 

MyUPI will also provide contextual information about beneficiaries before a payment is completed. For eligible transactions, it will support automated chargeback processing. A Transaction Replay feature will allow users to recall and repeat an earlier transaction through any UPI app.

 

What other payment facility has the RBI introduced?

 

The RBI has also introduced multicurrency capabilities for the foreign exchange category on Bharat Connect under a controlled user group (CUG) launch. The facility, which is being introduced in phases, is aimed at expanding forex services beyond the US dollar. It will support the euro, the British pound, the Canadian dollar, the Swiss franc and the UAE dirham.

 

Bharat Connect is operated by NPCI Bharat BillPay Ltd, and the forex facility is integrated with FX-Retail, operated by Clearcorp Dealing Systems (India) Ltd.

 

Following the assessment of the CUG phase, the multicurrency offering is proposed to be extended to more Bharat Connect channels and participating banks.