UPI is a system that was developed by the National Payments Corporation of India which allows a single mobile application to access different bank accounts in a safe and secure environment.
Users can also use the Hike wallet to recharge prepaid phones and pay postpaid bills from within the app.
Additionally, Hike is introducing Blue Packets, which are personalized digital envelopes that can be used to send monetary gifts for various occasions — the money will be transferred to the recipient's Hike wallet.
"It's one step further in our vision to make Hike a messaging platform that will change the way people interact with content and services," Kavin Bharti Mittal, founder and CEO of Hike Messenger, told CNBC about the new features.
Mittal is the son of Sunil Mittal, founder and chairman of Bharti Enterprise, which owns one of India's largest telecommunication networks, Bharti Airtel.
The concept of a Blue Packet is very similar to WeChat's electronic red packets, which represent the traditional practice of giving red packets filled with cash during Lunar New Year.
Users can put money into these electronic packets, personalize it with a message and send it to their friends or family for various occasions such as birthdays, anniversaries or just to thank them. To make it more entertaining, users have the option to send a select number of packets to a group chat, which would work on a first come, first served basis, with the packets expiring in 24 hours.
"We believe money can be the latest form of expression," Mittal said. He also acknowledged some of the new payment features were inspired by WeChat's parent company Tencent, which led a $175 million funding round in Hike last year along with Foxconn, that valued the company at $1.4 billion. Tencent also owns the other hugely popular messaging service in China — QQ.
"Some of the features we talked about in payments today have been inspired by Tencent and China. No doubt about that," said Mittal. "We talk to them very often, we visited their offices multiple times to get a sense of what's happened in the last six to seven years in China."
He added, "It's a very important thing because we still believe India's about four to five years behind China."
India is an attractive test bed for many technology companies because of its demographics: It has a young and growing population, and many people are connecting to the Internet for the first time — usually through a smartphone.
Local media reported that research from Internet and Mobile Association of India and IMRB International found the number of Internet users in the country is expected to reach 450 million to 465 million by June, registering a 4 to 8 percent jump from December 2016. The report indicated internet penetration is currently around 31 percent.
The smartphone market is also growing at a much quicker pace than the global average and, according to the June Ericsson Mobility Report, India added about 43 million mobile subscriptions in the first quarter of 2017. The report attributed the strong subscription growth in India to an attractive offer of free voice and data services by one of the local telco operators.
This provides scalability: Hike, for example, was founded in 2012, but has already amassed more than 100 million registered users, which is nearly a tenth of India's population. Mittal said the average user spends about 24 minutes a day on Hike, but he declined to disclose Hike's number of monthly active users.
The market's lucrative prospects mean competition is stiff. Facebook-owned WhatsApp and Messenger are two of the most-downloaded non-gaming apps on Google's Play Store, according to data compiled by U.S. venture capital firm Kleiner Perkins Caufield Byers. Earlier this year, WhatsApp announced it hit 200 million monthly active users in India.
Mittal, however, pointed out the big market size in India leaves room for more than one instant messaging service: "We've seen globally that we have multiple messaging apps that are very big in multiple countries like China, Japan — even the U.S. and Europe."
"For us to win, other messengers don't have to lose," he said.