AI Agents to Pay Through UPI: A New Framework in the Works
The Indian government is preparing a framework that could allow artificial intelligence (AI) agents to make payments through the Unified Payments Interface (UPI) without requiring user approval for each transaction, according to a report by Reuters citing three people familiar with the matter. The framework, expected to be developed by the National Payments Corporation of India (NPCI), is part of a broader push into "agentic AI," where software can take actions on a user's behalf.
The proposed system, referred to as the Unified Agent Protocol, could be unveiled next week at the Global Fintech Fest in Mumbai, as reported by Reuters and also mentioned by NewsBytes. NPCI did not immediately respond to Reuters' queries seeking comment.
How Would the System Work?
Under the proposed framework, users would give AI agents limited authority to make payments, rather than approving each transaction individually. Users could set rules governing when an agent can pay, how much it can spend, and potentially what types of transactions it can make. For example, an AI agent could be instructed to purchase groceries within a fixed budget; once conditions are met, it could complete the payment without manual authorisation.
The proposed infrastructure is expected to include spending limits, identity checks, and audit trails, according to Reuters. NPCI is also expected to provide infrastructure that merchants can integrate directly, as noted by both outlets.
The protocol will likely leverage two existing UPI mechanisms: UPI Circle and Reserve Pay, as reported by NewsBytes. UPI Circle allows a primary account holder to delegate payment authority to a secondary user, such as an AI agent. Reserve Pay enables customers to block funds for multiple debits.
Use Cases and Industry Adoption
Low-value, frequent purchases such as groceries are likely to be among the first use cases, according to reports from both India Today and NewsBytes. E-commerce platforms are expected to capture early demand as AI agents begin participating more actively in online shopping.
Over time, NPCI expects use cases to become more sophisticated, with AI agents placing orders based on sale offers or discounts and making investments based on specified instructions around price thresholds, as reported by NewsBytes.
The NPCI also plans to build a liability framework into the system, though details remain undisclosed, according to NewsBytes.
Industry Context and Existing Initiatives
The move comes amid growing interest in agentic AI payments. Mastercard completed its first authenticated agentic transaction in New Delhi in June, as reported by India Today. Pine Labs launched its P3P agentic protocol earlier this year, allowing AI agents to complete UPI payments after a single upfront authorisation, also noted by India Today. Banks currently allow blocks of up to Rs 10,000 for a maximum of 90 days under Reserve Pay, according to the same report.
UPI, managed by NPCI, is already the world's largest retail fast-payment system by transaction volume. According to a 2025 IMF report cited by NewsBytes, it processed 24.51 billion transactions worth ₹29.82 lakh crore ($314.21 billion) in August alone. Google Pay and PhonePe account for nearly 75% of this monthly transaction volume, as reported by both outlets.
The development underscores a larger change in digital payments, where AI agents may soon operate with a degree of financial autonomy, subject to user-defined guardrails.