While UPI accounts for over 85% of digital transactions in India, US businesses seeking to accept it face regulatory, infrastructural, and compliance challenges under recent RBI frameworks, marking a significant shift in cross-border commerce.
A US company can accept UPI from Indian customers, but not by simply ticking a box in an existing payments setup. UPI, the bank-to-bank system used through apps such as Google Pay, PhonePe and Paytm, has become too central to ignore: the Reserve Bank of India’s Payment System Report showed it accounted for 85.5% of digital transaction volume in the second half of 2025, underscoring how dominant it has become in everyday Indian payments.
That matters because many Indian buyers will not default to a card if UPI is missing at checkout. The obstacle for foreign sellers is not demand, but infrastructure: UPI is a domestic Indian rail, built around rupee settlement and local banking participation, so a US business cannot usually bolt it on in the same way it would add Apple Pay or a card gateway. Instead, the payment must be collected, processed and settled through a structure that complies with Indian rules.
The practical route is a licensed cross-border payment aggregator. In October 2023, the Reserve Bank of India introduced the Payment Aggregator-Cross Border framework, which brought facilitators of import and export payments under direct regulation. Under that system, an authorised provider can take eligible payments from Indian customers and remit the proceeds overseas, subject to RBI, FEMA and KYC requirements. Cashfree Payments says it became the first non-bank entity to receive RBI approval for both export and import PA-CB services on July 22, 2024.
For US businesses, the details still matter. The RBI framework caps transactions at ₹25,00,000 per unit of goods or services, which will be manageable for many software, course and digital-product sellers but less so for some high-value B2B sales. Recurring UPI payments also come with separate e-mandate rules, including pre-debit notice requirements and transaction limits that can differ by category.
It is also important not to confuse payment acceptance with tax compliance. A cross-border payment gateway may let a company collect money without setting up an Indian subsidiary, but it does not decide whether GST, income tax or other obligations apply. For some businesses, a merchant of record model may be more suitable because it shifts more of the tax and compliance burden to the provider, though usually at greater cost and with less control. For companies trying to sell into India without opening a local entity, the real decision is whether to own more of the compliance stack or outsource it.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
