India May Introduce AI Agents for Small UPI Payments Without Manual Approval

India’s digital payment journey has evolved from passwords, PINs and OTPs to fingerprints and facial authentication, making transactions faster and more seamless. Now, with AI, the next step could be completely hands-free payments, where systems recognise users, assess transactions and authenticate payments almost invisibly.

The country may allow AI agents to make small UPI payments without asking the owner every single time, as per a report by Reuters. The proposed framework called the Unified Agent Protocol could be unveiled at the Global Fintech Fest in Mumbai next week, said the sources to the agency. While the proposal has not been formally confirmed by the National Payments Corporation of India (NCPI), if introduced in the reported form, it would allow users to give AI agents limited authority to make payments based on pre-set instructions rather than approving each transaction individually.

What could possibly change

E-commerce platforms could be among the early areas where such payments are used.

Initially, the use cases are expected to focus on small and frequent payments, such as grocery purchases, as per the agency. E-commerce platforms could be among the early areas where such payments are used. Over time, potential use cases could extend to more complex transactions. Reuters reported that AI agents could potentially identify offers and discounts and place orders based on user-defined instructions. Further advanced applications could include investments based on specific price thresholds, though such uses would depend on the way the framework is ultimately designed and regulated.

The reported system could use existing UPI mechanisms such as UPI Circle, which allows payment authority to be delegated and Reserve Pay, which enables funds to be set aside for specified payments. According to the Reuters report, NPCI is also expected to provide infrastructure allowing merchants to integrate with the system. Users could potentially set rules covering how much an AI agent can spend and when it can make a payment. Spending limits, identity checks and audit trails are the safeguards being considered reportedly. The agency also reported that NPCI plans to establish a liability framework, although details were not available. This would mean that AI would not have complete authority in initiating a payment. The proposed model would allow a user to give the agent pre-authorised, rule-based payment authority, within the limited set by the system.

What other countries and payment networks are doing

Payment networks and fintech companies in other markets are also working in the same direction to allow AI agents to participate in commerce.

India is not the only country developing agentic payments. Payment networks and fintech companies in other markets are also working in the same direction to allow AI agents to participate in commerce. Mastercard has developed Agent Pay, an infrastructure designed to allow AI agents to conduct payments while using controls around trust, security and transaction visibility. Visa has also been developing infrastructure for agent-led commerce. The broader approach being explored by payment companies is to allow an AI agent to search for products, make choices based on instructions and initiate transactions, while retaining authentication and other controls.

In India, Mastercard has already conducted agentic commerce transactions with businesses, while fintech companies including Pine Labs have also been developing infrastructure for AI-led payments. As of now, the reported framework is still a proposed development. Its final features, transaction limits, safeguards, liability rules and rollout timeline would depend on what NPCI formally announces.