We love UPI. It’s fast, free, and everywhere.
From your neighborhood tea stall to your favorite online store one scan, one tap, done.
But here’s the thing: when something looks free in the digital world, you’re usually the product.
Let’s unpack how UPI apps might not cost you money, but they do cost you something else your data.
India’s UPI Explosion: The Landscape
To understand why your data is gold, first see how BIG UPI has become in India:
- In August 2025, UPI processed over 20,008.31 million transactions worth ₹24,85,472.91 crore. (NPCI)
- In FY25, UPI crossed 185.8 billion transactions, up ~41.7% from FY24. (Business Standard)
- In July 2025, UPI recorded ~19.47 billion transactions with value of ₹25.08 lakh crore. (ETBFSI.com)
- UPI’s share in non-cash retail payments hit 83.4% in FY25. (Business Standard)
- In June 2025 alone, UPI saw 18.40 billion transactions (~613 million daily) worth ₹24.04 trillion. (ETBFSI.com)
India now hosts one of the world’s largest real-time payment systems. In fact, on June 1, UPI handled 644 million transactions in a single day more than what Visa averaged on many days. (PaymentsJournal)
Interpretation: This scale means that UPI apps collect mountains of data from every small tea stall scan to major business payments. When you’re part of that ecosystem, your data is no longer just yours.
What Data Do UPI Apps Harvest?
Here’s what they typically collect knowingly or unknowingly:
- Transaction history: What you bought, when, how often, how much.
- Merchant info: Who you transact with (groceries, utilities, subscriptions).
- Location data: Exact locations where you make payments (home, café, work).
- Device & network details: Phone model, OS version, IP address, connectivity.
- Contacts & social graphs: Some apps request access to your address book (to help “find friends”).
- Demographic & behavioral signals: Time spent in app, frequency, patterns, card vs wallet use.
When combined, this builds a digital twin of your financial behavior not just what you spent, but who you are, what you value, and how much you can afford.
How UPI Players Monetize Your Data
Let’s peel back the layers:
1. Personal financial profiling
Your spending data helps apps and banks predict your financial profile:
- Are you a regular spender or saver?
- Do you pay EMIs on time?
- How much credit you can be extended.
These profiles feed into credit scoring models, influencing your eligibility and interest rates.
2. Targeted cross-selling & offers
Ever got a loan or insurance offer in-app just after making a big purchase? That’s the pipeline. Your UPI transactions trigger algorithmic suggestions:
- Insurance + health plans
- Mobile recharges & data packs
- Personal or merchant-loan offers
Because the apps know what you spend, where, and when, their offers look eerily “custom-fit.”
3. Insight monetization / data marketplaces
While many platforms claim they don’t sell your individual data, they often monetize aggregated insights:
- Users in Delhi spent ₹X on food delivery last month.
- Apartment dwellers in Chennai prefer these services.
These insights can be licensed to retailers, ad networks, financial firms, and others. The data monetization market itself is projected to grow aggressively India’s market is expected to reach USD 893.3 million by 2030 at ~30% CAGR. (Grand View Research)
4. Behavior-based pricing & dynamic offers
Your data may influence what offers you see or what rates you’re quoted. Two people might see very different interest rates or premium tiers even if their base profiles seem similar because of spending patterns, frequency, consistency, and location data.
The Data Trade-off: Would You Prefer ₹2 or Your Entire Profile?
Let’s frame it this way:
| Option | Cost | Benefit | Risk |
|---|---|---|---|
| Pay a small fee (say ₹2) per transaction | Transparent cost | Your privacy is better protected | You spend money but retain control |
| Pay ₹0 | No monetary cost | Seamless convenience | Your data is the currency |
Most of us choose “pay ₹0” without realizing the accumulated privacy cost. Over months and years, apps build a robust profile that can influence what you see, what you’re offered, and what opportunities you get.
The real question: would you rather pay a small, visible fee or give away your digital identity piece by piece?
State-Level & Usage Insights
Let’s peel off the national lens and zoom into how usage and merchant categories shape data value:
- In July 2025, groceries and supermarkets led UPI merchant transactions by volume in India: ~3.03 billion scans totaling ₹64,882 crore in value. (The Economic Times)
- Meanwhile, debt collection (large payments) topped the value charts. That means high-value usage carries heavier signals.
- Usage growth is happening across states: Tier-1 cities had early adoption, but growth is surging in Tier-II / Tier-III towns. QR code count jumped from ~569 million in May 2024 to ~670 million in May 2025. (FXC Intelligence)
- Also, number of banks onboarded on UPI climbed to 675 in June 2025 from 602 a year earlier. (FXC Intelligence)
Implication: Data isn’t just centralized in metro users it’s coming from rural shoppers, small merchants, highways, local shops making the profiling more comprehensive.
Regulation & Protections (Which Are Still Catching Up)
Yes the government is aware. But the trust net isn’t perfect.
- UPI is under the purview of NPCI and banks must follow data localization and security rules.
- Privacy acts like the Digital Personal Data Protection (DPDP) Act are in place, but enforcement is still early.
- A big gap: “Consent fatigue” most users don’t meaningfully read the privacy policy boxes.
- Even where data is “anonymized,” datasets can be re-identified when cross-referenced with other sources.
- In 2024, a survey found that among firms with revenues above ₹1,000 crore, 43% had formal data privacy offices; for smaller firms, only 11% did. (protiviti.com)
So you have protections on paper but in practice, it’s still a patchwork.
How This Data Can Shape Your Life
Your UPI data seemingly innocuous can ripple into other parts of your financial life:
- Credit access & limits: Your behavior affects how lenders see your repayment reliability.
- Offer segmentation: You may see higher cost offers or be excluded from certain promotions.
- Behavioral discrimination: Algorithms may limit your options before you even see them.
- Exposure to ads & misinformation: Frequent targeting from brands, political campaigns, or even scams.
Over time, your algorithmic “profile” becomes a filter that shapes your digital experience and opportunities.
How to Take Back Some Control
You can’t escape data collection entirely, but these steps help you regain control:
- Review app permissions regularly — revoke access to contacts, location, etc., unless needed.
- Separate apps: Use different apps for payments, investments, and shopping to break correlation.
- Opt-out where you can: Check privacy settings in UPI or banking apps.
- Limit links: Don’t link unnecessary bank accounts, secondary cards, or wallets unless needed.
- Be selective with merchant apps: Use trusted ones; avoid sandbox or mirror apps that demand more permissions.
- Use intermediaries: Use virtual cards or “dummy accounts” for low-value purchases to reduce traceability.
- Demand transparency: Write feedback so apps improve privacy practices.
Think not of perfect privacy think “reasonable obscurity.”
A Glimpse Into the Future
The way forward:
- Data monetization in India is expected to reach USD 893.3 million by 2030. (Grand View Research)
- As AI, IoT, and smart devices grow, more behavioral and location layers will feed into your financial profile.
- Some scholars propose a data licensing model, where users can “rent out” permission to their data instead of giving blanket consent. (IDEAS/RePEc)
- The gap between big platforms and small could widen large firms that own data get richer power, while you remain the product.
Final Thoughts
So next time you pay “₹1” remember you didn’t pay with money you paid with your life’s financial mosaic.
Every scan, every payment, every merchant you visit, every location you frequent these are puzzle pieces in your data identity.
UPI apps are reshaping how finance, marketing, and information reach you invisibly and often irreversibly.
The good news? You can push back. Use these small changes. Stay conscious. Demand better privacy. And view “free UPI” through a new lens: not free at all.