Why Is Everyone in India Paying with QR Codes?

Introduction

Why is it that in India everyone is paying with QR codes? Buying a train ticket scan. Getting groceries scan. In a rural village called Lord High, locals would attach a mobile phone to a bamboo stick so that the phone can get internet access just so the entire village can pay with QR codes. >> That's how you pay. Yeah, that's how you pay. Everyone's using a smartphone. Everyone has good speeds of data. Everyone has a digital bank account and that's how the real life is. So India

right now does the most amounts of digital transactions globally. That's crazy. >> Just this August, UPI has reached 20 billion transactions in a single month. 20 billion in a single month. I have so many questions. How did UPI get so big? How is this impacting people's spending behavior? And if this technology works so well in India, would it work in the States or another country? I realized that the reason why everyone is using QR codes to pay is in three parts. Disclaimer, I'm trying to

answer why people use QR codes in India from a UX, psychology, and technology perspective. While the financial and legal implications of this payment method is important, it is not the focus of this video. All right, let's start.

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Part 1: What Is UPI and How It Works

Understanding UPI (Unified Payment Interface)

To understand why people are using QR codes, we have to understand first how they are doing this. Interupi unified payment interface. This is the back-end system developed by the National Payments Corporation of India. Before 2016, when you wanted to send money to a merchant or a bank, you

needed to know a lot of things. Bank account number, bank name, branch name, IFSC code. UPI gets rid of all of that. All you need to know to send money is a phone number or a UPI ID.

Why UPI Became Revolutionary

Instead of a middleman holding all your funds, UPI sends money from bank to bank. This is safer, faster, and you're going to like this one, free. What's unique about India with technology is the rise of mobile phones. I covered this in other videos, but basically smartphones blew up. Compared to laptops, it's cheaper,

easier to carry, and eventually data and the internet became quite affordable. So, within the last decade, as phones blew up, UPI saw this trend and was like, "Okay, I see you." It quickly caught on and adapted to the mobile user experience. At one point, you could even use Nokia phones, the ones with keypads and everything, to scan and pay.

Role of Consumer Apps

But what made UPI really come to life are consumer apps. Phone pay, PTM, Google Pay. If UPI was the skeleton of a person, these consumer apps would be the muscle.

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Part 2: Why UPI Blew Up in India

User Experience Perspective

So why did UPI

blow up specifically in India? Let's start from a user experience perspective. Just imagine the scenario. You're going to a Chiwala. You want your masala chai right now, but you don't have cash on you. That's fine because even the smallest Chiwala would have a QR code.

Low Cognitive Load

All you have to do is scan, pay, boom. Next thing you know, you're strutting around with a cup of cutting chai, five packs of parli, and a plate of onion pakora. The act of paying is so easy. This user flow, compared to other

payment experiences, has a pretty low cognitive load, which is the total mental effort placed on a person's working memory at any given time.

Easy Setup

It's also a pretty accessible payment method because to set it up, all you need is a bank account and a phone. This is way more simple than the credit card approval process which may take many days and is contingent on a credit score. Currently, even foreigners can use UPI when they visit India.

Impact on Small Businesses

So, as you can imagine, UPI has changed the way small businesses do business. Even

businesses from the most rural parts of India can trade with consumers living in urban locations. From a grassroot level, this has really helped the economy. Also, for both consumers and businesses, there is no transaction fee.

Interoperability

Sending money online is free. Yeah, it's possible. Who would have thought? UPI also has great interoperability, which is a fancy word for it works everywhere.

Payments Through WhatsApp & More

Even through texting consumer apps like WhatsApp, you can send money midway through a text. Now your auntie from across the country has

no excuse not to send you money during holidays.

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Part 3: Security and Scam Prevention

Instant Confirmation

Another major reason why everyone pays with QR codes in India is security. Let's come back to this Chiwala stand. As soon as you send money, both you and the Chaiwala owner get a confirmation a transaction has occurred. There's no such thing as pending transaction.

PIN Authorization

Also, every single transaction is authorized by a secure PIN set by the user.

Early Scams and How They Evolved

With this fast speed and PIN feature, scammers became unemployed on the spot. Or did they? They actually just got very creative.

Fake Audio Confirmations

So, when this whole QR code thing first started, every store had a machine that displayed this code. And when you scan and pay this machine, it would have a voice that comes out of it saying, rupees 25 received on phone. >>

Scammers mimicked this audio using pre-recorded clips.

Fake QR Replacements

Some shop owners would print out QR codes and stick them. Scammers replaced them with their own QR codes.

How Apps Responded

Builders caught on. With each scam story, they iterated on the product and built a better version.

The ‘Send 1 Rupee’ Feature

For example, in one of these apps, there's a button: Send one rupee.
Purpose: confirm receiving end before sending large amounts.

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Part 4: UPI and Consumer Spending Behavior

The Psychology of Digital Spending

From what I understand, this is a pretty common thing in India and the speed of these transactions mimic the feeling of handing someone a bill physically in real life in real time.

Does Money Feel “Less Real”?

Well, just like Tap to Pay, money doesn't feel real. People sometimes feel like they're spending like a billionaire.

Survey Findings

• 74% said UPI increased spending
• 7% said it reduced spending

Design Lessons for Product Builders

Even though most already budget, frictionless payment has downsides.
Think before buying.

Introduce friction for impulse control:

• Informational pop-ups
• Warning signs

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Part 5: Comparison With the US and Global Adoption

Would UPI Work in the States?

As of now, it's hard.

Cultural Differences

India: pay with money in bank.
US: credit cards + BNPL dominate.

System Differences

US systems are siloed: Venmo, Cash, Card.
UPI integrates everything.

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Part 6: Final Thoughts and Learnings

Build for the User

UPI works extremely well in India because it solves India-specific problems.

Understand users deeply:

• Culture
• Needs
• Socioeconomic background

Open Questions

And I'm wondering if you have used UPI, what has been your experience? And for those of you who don't live in India and hasn't used UPI, why do you think the system hasn't expanded across the world? Why does it just work for India?