How agentic AI could transform the way we make digital payments

Why in the News

The National Payments Corporation of India (NPCI), the umbrella body that operates India’s retail payment systems, has unveiled MyUPI, an artificial intelligence (AI) powered revamp of the Unified Payments Interface (UPI) capable of delegating pre authorised payments and filing payment disputes automatically. It has also launched a back end tool described as the connective tissue for AI interaction across the financial ecosystem, called Agentic Orchestration and Messaging (AtOM). Both were shown at the Global Fintech Fest in Mumbai, where several of the country’s largest payment companies demonstrated AI integration in their products. Conventional AI already sits inside the payments stack, reducing friction and screening fraudulent transactions from the back end. The shift now proposed is different in kind: an agent that carries the consumer’s entire payment journey rather than one that checks it, which moves the question from how safe a payment is to who is accountable for a payment the consumer did not personally execute.

What is agentic commerce?

1. Definition: Agentic commerce is a digital trade model in which AI agents discover, negotiate and execute a purchase on behalf of the customer.
2. Authorisation is not bypassed: The model does not remove the requirement of authorisation. It compresses the number of steps in the buying journey, including the payments stage.
3. Agentic AI, defined: An agentic AI model executes tasks for a user without constant prompts, operating inside limits the user has set in advance.
4. Consumer oversight survives: The consumer retains oversight through the process and can change any component of the transaction before it completes.

What has NPCI actually launched?

1. MyUPI: The revamp delegates pre authorised payments to an agent and files payment disputes automatically and without a separate consumer initiated complaint.
2. AtOM: The back end tool standardises how AI systems across the financial ecosystem talk to each other, which is what allows an agent on one platform to act against rails operated by another.
3. Placement on public rails: Putting the capability inside UPI rather than leaving it to individual wallets extends an interoperable public system into agentic commerce.

How does agentic AI differ from the AI already used in payments?

1. Conventional AI is a back end function: It reduces friction in the payments process, makes back end processes more reliable and screens consumers from fraudulent transactions.
2. Agentic AI is a front end actor: It performs the consumer’s task rather than validating it, which makes the agent a participant in the transaction rather than a control over it.
3. Adoption is early: Agentic AI adoption in payments remains at a nascent stage, and agentic commerce is currently its largest use case.

What are private wallets already doing?

1. Amazon Pay’s Smart Wallet: The wallet combines smart recommendations, biometric authentication and a tap and pay feature, with an agent handling each step of the journey.
2. Auto execution within a threshold: The wallet executes small ticket regular purchases automatically inside a set limit. A customer with a monthly grocery limit of Rs 10,000 authenticates only once that threshold is crossed.
3. Single authentication in place of repeated prompts: An agent that selects the payment instrument replaces multiple one time passwords and authorisation requests with a single authentication event.
4. Industry wide adoption: Samsung Pay, Google Pay and PhonePe already offer pin less small ticket purchases, and MyUPI carries a comparable feature.

Challenges to agentic payments

1. Liability on a delegated transaction is unallocated: No settled rule assigns the loss where an agent transacts inside a pre authorised limit and the consumer later disputes the outcome. Eg. The RBI’s limited liability framework for unauthorised electronic banking transactions is written around a customer who did not authorise the payment at all.
   The Fix: Extend that limited liability framework to agent initiated payments, with the reporting window running from the transaction alert rather than from discovery.
2. Authentication thins as steps are removed: Collapsing several authorisation checkpoints into one removes the repeated confirmations that currently interrupt a compromised session. Eg. Delegated payments under the UPI Circle facility already run on the primary user’s single authentication for a secondary user’s spending.
   The Fix: Require a step up authentication whenever the agent changes the merchant, the instrument or the amount from the pattern it was authorised on.
3. Ranking can be tuned to the platform: An agent that selects products and payment instruments can be configured to serve the platform’s commercial interest rather than the buyer’s. Eg. The Competition Commission of India has investigated preferential treatment of selected sellers by large online marketplaces.
   The Fix: Mandate disclosure of the ranking and payment instrument selection criteria an agent applies, on the same principle as the Central Consumer Protection Authority’s dark patterns guidelines.
4. Grievance redress assumes a human decision: The ombudsman route is built around an identifiable act by a named regulated entity, not an autonomous action taken by a model. Eg. The Reserve Bank Integrated Ombudsman Scheme, 2021 requires a complaint to be made against a specified regulated entity.
   The Fix: Register agentic payment providers so that every agent action maps to an accountable regulated entity before the service reaches scale.

Conclusion

Agentic payments are at the demonstration stage, with the public rails and the large private wallets converging on the same design within a single week of announcements. The unresolved question is accountability: a system built to compress authorisation steps is being layered onto a consumer protection framework that assumes the customer authorised each step personally. What to watch is whether the RBI issues a liability and authentication standard for agent initiated payments before MyUPI moves from demonstration into general availability.

Back2Basics: National Payments Corporation of India (NPCI)

1. What it is: NPCI is the umbrella organisation for retail payments and settlement systems in India.
2. How it was set up: It was incorporated in December 2008 at the initiative of the RBI and the Indian Banks’ Association, as a not for profit company under the companies law.
3. Legal basis: It operates under the Payment and Settlement Systems Act, 2007, which gives the RBI authority over payment systems.
4. What it runs: UPI, the Immediate Payment Service, RuPay, the National Automated Clearing House, FASTag and the Bharat Bill Payment System.

Matching Previous Year Question

“Which one of the following statements about Unified Payments Interface (UPI) and Central Bank Digital Currency (Digital Rupee) is NOT correct? (a) UPI is a real-time payment system but Digital Rupee is akin to sovereign paper currency (b) In case of UPI, settlement for end users happens instantly; in case of Digital Rupee, wallet balance gets transferred to another wallet (no traditional settlement) (c) UPI transactions are recorded by banks and reflected in bank statements; in case of Digital Rupee, no data is captured in bank statements (d) In both the cases (UPI and Digital Rupee), the liability lies with the users and their respective banks”