Passkeys, Apple Pay and the Indian Payments Market: Implications, Opportunities and Strategic Assessment

Introduction Summary

The idea behind India’s highly successful digital ecosystem, is to make the rail invisible and make payments easy. UPI separated the experience from traditional card infrastructure transforming the landscape entirely. It enabled consumers to move money directly into accounts using digital channels and mobile phones.

The next evolution is about changing how consumers authenticate themselves before making a payment. This is where passkeys become strategically interesting.

Passkeys are not a replacement for rails. They explore an opportunity around combining that authentication layer with wallets, tokenization, biometrics and payment orchestration.

Recent reports indicate Apple is preparing an India Apple Pay launch around October, 2026, initially with Visa/Mastercard cards and potentially without UPI at launch. Apple has not publicly confirmed that launch timetable yet. (Business Standard, August 2026, citing sources familiar with Apple’s launch planning)

It opens a new strategic discussion – “Who owns the customer at the moment of authentication – the payment rail, the bank, the payment app, or the device ecosystem?”

“Passkeys could become the authentication primitive while network tokenization remains the payment primitive” – Debashis Bhattacharyya

The Four Layers of India’s Digital payments Architecture Today

The scale of UPI is enormous: government data indicates that India had 55.49 crore UPI users as of June 2026, while UPI processed 24,162 crore transactions during FY2025-26, with a value of ₹314 lakh crore (Ministry of Finance, written reply to the Lok Sabha, July 2026, citing NPCI data).

Apple Introduces a New Stack

Apple enters the market with a potentially different workflow & ecosystem. It creates a new consumer interaction model that comprises of – iPhone, Secure Enclave, Face ID, Apple Account, Wallet, Passkeys & Tokens.

Interestingly, the traditional journey for a user today looks like

User → Username/Mobile → Password/OTP/PIN → Payment Account.

The passkey model changes the authentication interaction to:

Device → Cryptographic Credential → Biometric Verification → Cryptographic Assertion → Bank / Application

Apple’s implementation uses public/private key cryptography. The private key stays protected on the device. The service stores the corresponding public key. During authentication, the device signals a challenge, which the service verifies using the public key. Apple describes passkeys as FIDO/WebAuthn-based public-key credentials, with Face ID/Touch ID to authorize their use (Apple Developer, Passkeys documentation).

This changes the entire experience of the customer, look at the phone and you are authenticated to make the payment instead of confirming with a OTP sent to your choice of channels like email/text.

Also, apple passkeys can be synced through iCloud Keychain and used across Apple devices improving customer experience.

Biometrics in India & Passkeys

NPCI has already introduced on-device biometric authentication for UPI transactions allowing fingerprint/face authentication on the device as an alternative to the UPI PIN, capped at a fixed transaction limit that NPCI has already revised upward once as adoption grows, subject to eligibility and security controls.

UPI PIN → device biometric → cryptographic/device-bound authentication

This makes the convergence with Passkey-style authentication very interesting in the Indian ecosystem.

Apple and the Indian Market

The real opportunity here is Apple’s authentication experience around the rails.

Consider today’s model – Merchant → PhonePe / Google Pay / Bank App → UPI → Bank

Apple Illustrative model is: Merchant → Apple Pay / Apple Wallet → Face ID/Passkey → Card Network / UPI → Issuer Bank

So, Apple can own the experience and hide the rails: users simply pay with iPhone or Apple Pay, abstracting any friction: Checkout → Apple Pay → Face ID → Payment Auth.

Apple’s evolution with UPI

UPI has an enormous market in India including vast merchant acceptance, QR acceptance across the country’s demography, established Bank connectivity, offers lower friction and has massive consumer support with familiarity. NPCI describes UPI as supporting both merchant payments and fund routing across participating banks. So, the likely evaluation would be Apple becoming the orchestration layer between networks and UPI.

Apple Wallet → Authentication → Face ID/Passkey → (Visa/Mastercard/UPI)

“UPI won India by owning the rail; Apple has the opportunity to compete by owning the authentication and wallet layer above the rail -using Face ID, passkeys and Apple Wallet to make the payment rail invisible to the consumer.” – Debashis Bhattacharyya

Networks Perspective

Apple pay would create a simple digital experience, thereby increasing card-on-file and tokenized card usage among affluent iPhone users. This will improve card usage rates across the country especially in the metro cities. Purely from customer point of view, they can do away with the redundancy of – Entering 16-digit card number, Expiry → CVV → OTP.

Impacts on the Market

• Apple would gain with wallet engagements, better customer experience, payments and gains through transactional economics but will need to partner with UPI and Rupay to grow.
• Networks like Visa and Mastercard will benefit from increased tokenized card transactions.
• Banks will potentially encounter lower fraud cases and better authentication due to passkeys.
• Merchants will see better conversion %, reduced checkout friction and potentially lower abandonment of carts.
• The consumer payment experience with apple can adversely affect the likes of PhonePe, GPay and PayTM. But since Apple’s TAM is smaller in India when compared to Android. This will end up being a premium segment battle until iPhones launch a competitive product for the Indian market.
• This model could lead to a scenario where the consumer doesn’t choose the rail. The wallet determines it based on factors like merchant acceptance & economics, network availability, consumer preference, Rewards, Risk score, Transaction value etc.
• It paves way for Agentic Commerce by allowing agents to pay through apple pay with eligible merchants reducing checkout friction.

Conclusion

India’s payment ecosystem will see a new evolution powered by passkeys, biometrics and tokenization. It might move into a three-layered architecture where Apple Pay joins the likes of Gpay/PhonePe to provide and enrich customer experience. The orchestration would become key routing transactions through rails like UPI, Visa, Mastercard, RTP etc. This means the rails become commodities, and value moves upwards to customer experience that includes identity, authentication and orchestration. The power of the rails will always remain their scale, connectivity and acceptance but the question might change from “What rail are you using?” to “Which wallet are you using?”. For consumers it will mean a remarkably simple checkout process. It also will be central to Agentic Commerce as that ecosystem depends on user intent, making Authentication a critical control while making payments.