As UPI evolves, marketers see the next frontier for conversion advertising

New Delhi: As India’s UPI ecosystem enters a new phase, the payment experience itself is turning into a potential marketing surface. Platforms are no longer just tools for transactions; they are evolving into arenas for visibility, user engagement, and advertiser investment. With the influx of new players and AI-driven personalisation, the intersection of fintech and marketing is becoming increasingly complex, yet full of opportunity.

UPI, the new conversion layer?

Ali Zaidi, Senior VP, Media at Tonic Worldwide, framed UPI as a conversion-first opportunity rather than a source of fragmentation. “Over the next quarter or two, I don’t see fragmentation as the big outcome; I see more conversion opportunities opening up. New UPI players are going to create media inventory closer to checkout than anything we’ve had before. Instead of just ‘click to website,’ brands will start using ‘click to pay’ flows inside chat, commerce and utility journeys. With UPI already doing around 20 billion transactions a month, this is now a serious conversion surface, not an experiment.”

Ambika Sharma, Founder and Chief Strategist at Pulp Strategy, sees this shift similarly but frames it as an intent-driven moment. “I see the entry of new UPI players completely reshaping media planning. It shifts the focus from impressions to intent. Every payment touchpoint, from checkout to post-transaction, is now a brand moment. I plan for these transactional journeys alongside Meta and YouTube because they sit closer to real consumer action.”

Delphin Varghese, Co-founder and Chief Revenue Officer at AdCounty Media India, added a layer of nuance, emphasising precision and purpose. “Our aim is precision, not presence. As the world gets busier, relevance is how we win. We're investing in data-driven targeting, contextual storytelling, and performance-based outcomes over share of voice! We're fighting for our share of attention! We employ AI to help us forecast audiences, and we're creating and collaborating with new payment platforms that make the value exchange easy to navigate, versus being an intrusion. Our goal is to create ad experiences that are purposeful, measurable and privacy-first because it's challenging to navigate a busy landscape and if we want people to pay attention, we need clarity.”

Zaidi highlighted the economic incentive of using UPI surfaces. “A measured shift, not a dramatic one. I’d move 5–10% of performance budgets into UPI-linked paths immediately, especially for BFSI, subscriptions, D2C reorder journeys and local services. The economics are simple: if you shorten the distance between ad and payment, your conversion rate goes up and your CAC goes down. That’s where the market is heading.”

UPI growing the ad ecosystem or fragmenting it?

UPI is not just a conversion tool; it is also expanding the advertising landscape. “When a platform category is moving Rs. 24–25 lakh crore a month, it naturally attracts commerce-led advertising. We’re not slicing budgets 10 ways; we’re adding a new media layer at the moment of payment. Policy continuity has also helped since the market-share cap wasn’t forcefully imposed, big players stayed stable and challengers could still grow. That gives brands room to test new formats without disrupting their core mix,”  Zaidi explained.

Sharma emphasised that budgets are not being stretched thinner. “This does not stretch budgets thinner. It expands the market. UPI offers clear conversion signals, and that makes marketers more willing to invest. I see spending moving from broad awareness to performance-driven placements that deliver measurable results.”

“With new players entering, we’re not seeing budgets scatter; rather, UPI-led advertising is expanding the digital spend universe. In the near term, media planning will lean heavily on transaction-level insights, making performance more accountable and immediate,” Ramya Ramachandran, Founder and CEO of Whoppl, added.

The quiet rise of commerce-contextual ads

Despite the promise, UPI advertising is still in its nascent stages. “Right now, it’s small and hidden under performance or CRM budgets because nobody reports it separately yet. But it’s definitely growing. India’s digital ad market is about Rs 1.64 lakh crore this year, and while UPI-led flows are still early, the behaviour shift is obvious. AutoPay is rising, Tap-to-Pay is now mainstream, and Credit-on-UPI has unlocked financed purchases. The minute these experiences get packaged properly by platforms, this will become a clear line item,” Zaidi noted.

Sharma echoed this, forecasting a rapid scale-up: “Right now, UPI-led advertising is still small, maybe a few percentage points of digital budgets. But with more players creating inventory and better analytics, this will scale quickly in the next year.”

Varghese highlighted the importance of metrics and pilots. “Yes, we are seeing early traction and pilot activity around UPI-enabled formats. Brands are interested in the contextual strength of moment-based marketing at the point of payment. UPI presents a unique opportunity to connect intent with action in real-time. Our brand partners are experimenting with lightweight, value-exchange advertising formats, like instant cashback or reward-based messaging, that improve the user experience rather than interrupting it. It is still early days, but early engagement metrics are optimistic and point toward the arrival of commerce-contextual advertising.”

AI as a multiplier

Artificial Intelligence is widely seen as a key driver for maximising conversion. “Not in reach. But yes, on pure conversion, absolutely. Meta and YouTube still dominate discovery and attention. But when somebody is already in an intent state, a UPI journey can close the sale faster, especially with AI recommending the right offer or EMI at the right moment. So this isn’t about choosing one over the other; it’s about building a full-funnel system where demand is built on Meta/YouTube and closed inside UPI,” Zaidi explained.

“AI is the multiplier. It will not replace Meta or YouTube for time spent, but it will rival them for conversion and customer value. AI-driven personalisation combined with UPI intent data is where the next level of marketing efficiency will come from,” Sharma agreed.

Varghese also highlighted AI’s role in orchestrating multi-channel spend. “We're also going to leverage things like AI-based attribution models to better understand how to allocate spend based on the level of effectiveness of channels we have engaged. The future of media isn't more channels; it is better orchestration across channels.”

Privacy and trust are non-negotiables

Across the board, the sensitive nature of payment data is recognised as a major challenge. “The biggest challenge is trust. Payment data is highly sensitive, and the industry cannot treat it like just another retargeting signal. The only acceptable way forward is clear consent, a clean purpose definition, and full transparency with the user. Keep payment data separated from identity layers, minimise what you store, log everything, and give users a choice. If we cross the line here, the entire ecosystem suffers,” Zaidi warned.

Sharma echoed this concern. “The challenge is privacy. I believe the separation between payment data and ad data must be absolute. Transparent consent and secure clean-room models are non-negotiable. If the ecosystem holds that line, UPI can become India’s most trusted and high-performance digital advertising channel.”

Varghese expanded on the ethical framework for using transaction data. “Transaction data can unlock a wealth of rich behavioural insights—transfer rate, transaction volume, frequency, etc.—that improve targeting precision, if used responsibly. But we not only have a compliance framework (consent, anonymisation, etc), we follow a principle of making it part of our ethos. We may, for instance, develop audience cohorts from aggregated insights, but we will never develop insights from a person’s private or consumer identity. Privacy is not a box to check—it is a contract of trust. The real innovation will be creating contextual relevance that reaches the right consumer without crossing thresholds of acceptable behaviour so that each targeted experience feels purposeful, respectful, and transparent.”

He also noted the importance of native, non-intrusive integration. “Yes, native integrations into payment and conversational experiences are a priority. We are considering contextually relevant, value-add formats, like offers post-transaction, brand partner rewards, or micro-stories that are embedded in a payment confirmation screen. These are not ads in the conventional sense; they are brand moments embedded seamlessly in user flow with the intention of augmenting, not competing, with the user’s core payment experience. If executed effectively, we can engage, create recall, and build trust with the user, all without the modal ever feeling disruptive.”

Ramchandran summed up the ecosystem view. “The real challenge is blending payment and behavioural data ethically, ensuring transparency and consumer consent. Moving forward, brands that balance innovation with responsibility will define how India’s payment ecosystems reshape digital marketing and consumer engagement.”