India readies UPI for payments made by AI agents: report

India is preparing a framework that could allow artificial intelligence agents to make small payments through the Unified Payments Interface (UPI), according to Reuters.

The Unified Agent Protocol is expected to be presented at the Global Fintech Fest, which begins in Mumbai on September 8. The National Payments Corporation of India (NPCI), which operates UPI, has not confirmed the plan publicly.

Under the proposed system, customers could authorize an AI agent to complete transactions within defined limits. The agent might reorder household supplies, for example, without asking the customer to approve every payment.

The protocol is expected to draw on two existing UPI features. UPI Circle allows an account holder to give another person limited payment authority. Reserve Pay lets customers set aside funds that can be debited over several transactions.

Banks currently allow customers to reserve up to ₹10,000 for a maximum of 90 days, Reuters reported. Those limits may be revised for payments initiated by AI agents.

The proposal comes as UPI reaches another record. The system processed 24.51 billion transactions worth ₹29.82 trillion in August. Adding AI agents would give banks, merchants and technology companies a new way to initiate payments on behalf of customers.

It would also change the risks surrounding a transaction. A customer may authorize an agent to buy groceries below a set price, but the agent must still select the product, seller and timing. An incorrect purchase could result from poor instructions, inaccurate information or manipulation of the agent.

The proposed safeguards include spending limits, identity checks, transaction records and rules defining what an agent may buy. A liability framework is also being developed, although its details have not been disclosed.

Other payment companies are testing similar models. Mastercard completed what it described as its first authenticated agent-led transaction in New Delhi in June. Pine Labs has introduced a system that lets an agent complete UPI payments after the customer provides initial authorization.

The proposed protocol could make AI agents a new payment channel. Its adoption will depend on whether authorization, audit and dispute mechanisms prove as reliable as the payment infrastructure beneath them, analysts said.