In FY 2026, the global payments industry will be watching Japan closely. That’s when India’s Unified Payments Interface (UPI) is expected to begin a trial rollout in the country, marking one of the most significant cross-border expansions of the world’s largest real-time payment system.
The pilot, initially aimed at Indian tourists, could become a test case for how account-to-account (A2A) payment systems scale across highly developed, card-centric markets like Japan, where, unlike India, credit cards dominate cashless payments landscape, making up around 82–83% of the cashless transaction value.
The Project at a Glance
The Japan UPI rollout is anchored in a Memorandum of Understanding (MoU) signed between NPCI International Payments Limited (NIPL), the international arm of India’s National Payments Corporation of India (NPCI), and NTT DATA Japan, a major Japanese IT and payments infrastructure provider, last October.
The agreement outlines a trial phase starting in Japan’s FY 2026, which runs from April 1, 2026, to March 31, 2027. During this period, selected Japanese merchants connected to NTT DATA’s payment network are expected to accept UPI payments from Indian visitors.
Instead of promising a nationwide consumer launch right away, the initiative is carefully designed as a controlled pilot to test technical interoperability, settlement flows, merchant readiness, and user experience before any wider expansion.
What Is UPI and Why It Matters
Launched in India in 2016, UPI is a real-time, account-to-account payment system that allows users to transfer money instantly between bank accounts using mobile apps and simple identifiers such as phone numbers, QR codes, or virtual payment addresses.
Unlike card networks, UPI does not rely on intermediaries like issuing or acquiring banks in the traditional sense. Payments are pushed directly from a user’s bank account, authenticated in real time, and settled almost instantly.
The system has grown at an unprecedented scale. Today, UPI processes tens of billions of transactions annually, making it the largest payment system in the world by transaction volume. In India, it has become the default payment method for everyday commerce, from street vendors to e-commerce platforms, handling everything from micro-payments to high-value transfers.
Furthermore, UPI’s set of functionalities develops extremely rapidly, now including agentic payment testing with leading global AI platforms, shared family payments at e-commerce marketplaces, evolving penetration into the wearable ecosystem through smart glasses and select smartwatches, and even integration with credit card products.
Its success has made UPI a global reference point for open, real-time payment infrastructure.
How the UPI Trial Will Work in Japan
Under the proposed model, Indian tourists will be able to use their existing UPI apps, such as PhonePe, Google Pay, Paytm, or BHIM, to pay at participating Japanese merchants.
At checkout, users will scan a UPI-enabled QR code, with the payment debited from their Indian bank account in rupees and settled to the merchant in Japanese yen via currency conversion. No Japanese bank account or new app will be required for the payer.
The tourist-first approach is intentional. Indian travel to Japan has been rising steadily, and focusing on visitors allows regulators and payment providers to limit risk while testing real-world usage in retail, hospitality, and transport settings.
Since the post-pandemic rebound in travel demand, the number of Indian visitors to Japan has almost doubled. In 2023, more than 166,000 Indian tourists visited the country. In 2024, this number grew by 40% to 233,000, and in 2025, Japan already recorded 315,100 Indian visitors, up about 35 % from 2024 and nearly 80 % higher than pre-COVID levels in 2019. This unprecedented growth hints at the growing need of localized payment methods for the tourists coming from India to Japan.
What Comes After the Trial
If the pilot proves successful, the next stages could include:
- Expanding merchant coverage beyond tourist-heavy areas;
- Integrating UPI more deeply into Japan’s domestic QR and POS infrastructure;
- Exploring use cases beyond inbound tourism, such as cross-border remittances or business payments.
At the same time, any potential broader rollout would depend on regulatory alignment, commercial uptake, and demonstrated operational stability.
UPI Beyond India
Japan is far from UPI’s first international experiment. The system is already live or operationally integrated in several countries, primarily for Indian travelers.
These include Singapore (via PayNow linkage), the UAE, France, Nepal, Bhutan, Sri Lanka, Mauritius, and Qatar. In most of these markets, UPI is accepted at airports, tourist attractions, and major retail locations, with varying degrees of penetration.
While transaction volumes abroad are modest compared to India, adoption has been strongest in tourism-driven corridors, where familiarity and ease of use offer a clear advantage over cards or cash.
Why Japan Matters
Japan’s payments ecosystem is technologically advanced but traditionally card- and cash-centric. A successful UPI trial there would signal that real-time, account-based payment systems can seamlessly coexist with and complement established networks in mature markets.
Whether in time it would substitute the more traditional payment methods? It largely depends on the market. In India itself, debit card use for payments has declined significantly in recent years as everyday spending has shifted to UPI. However, in foreign markets, it largely remains one of multiple options. Convenient? Sure, but not as popular as familiar domestic and global payment systems. At the same time, UPI’s growing scale inspires similar A2A projects to improve and expand as well, increasing the global adoption of these real-time payments.
Therefore, as FY 2026 approaches, the Japan pilot will serve as a litmus test not just for UPI’s global ambitions, but for the broader future of cross-border, real-time payments.
