Unified Payments Interface (UPI), launched by the National Payments Corporation of India, has transformed the Indian payment ecosystem. Its simplicity and accessibility have accelerated the growth of digital transactions, reaching even small corner shops. This paper explores the relationship between digital infrastructure, such as broadband and smartphone penetration, and UPI adoption in India, alongside the government-led initiatives that have facilitated its expansion. The analysis further highlights developmental outcomes, including enhanced financial inclusion, the integration of MSMEs into the formal financial system, and broader economic formalisation. At the same time, systemic challenges such as market concentration, technical downtimes, security concerns, and regulatory constraints that may affect UPI’s long-term sustainability are critically examined. Based on these findings, the paper also offers policy recommendations to strengthen UPI’s role in advancing inclusive and sustainable digital finance in India.