India’s payments landscape has reached a crucial milestone with the home-grown Unified Payments Interface (UPI) solidifying its dominance in the digital economy. According to the Reserve Bank of India (RBI) annual report for FY 2024-25, UPI processed approximately 185.8 billion transactions during the year, reflecting a growth of about 41.7% from the 131.1 billion transactions recorded in FY 2023-24. UPI’s share in the total digital payment volume increased to 83.4% in FY25, up from roughly 79% in the previous year.
What drives these numbers is a fundamental shift in how Indians conduct transactions. UPI’s platform — interoperable across banks, open to fintech participation, and usable for both peer-to-peer and merchant payments — has expanded accessibility and encouraged daily usage. Its dominance in volume is evident across urban and rural areas, as small-ticket payments rapidly transition to digital.
For example, UPI’s transaction value reportedly rose to ₹261 trillion (₹ 261 lakh crore) in FY25. In contrast, traditional card-based methods are showing signs of commoditization: debit card transactions declined sharply to about 1.6 billion in FY25 from around 2.2 billion in FY24, while credit card transactions increased to 4.7 billion.
Beyond the figures, the implications are significant. UPI’s dominance suggests that digital payments in India are no longer a niche market — they are now mainstream. With non-cash retail payment volume in India reaching 99.9% of total non-cash transactions, the country has nearly completed the shift from offline to digital retail payments.
For businesses, lower acceptance costs and instant settlement have made UPI a standard payment choice. For consumers, especially in semi-urban and rural areas, UPI has lowered barriers to adopting digital payments by simplifying QR code merchant acceptance and linking bank accounts through mobile apps.
At the same time, UPI’s growth raises questions for the ecosystem: while transaction volume is overwhelming, the value per transaction remains lower than high-value payment systems. Card networks still lead in large-value payments and cross-border transactions.
Furthermore, as UPI expands internationally (the RBI plans to launch it in 20 countries by 2028-29) and adds new features (such as credit on UPI rails and increased merchant acceptance), it must tackle issues related to fraud, security, regulatory oversight, and infrastructure robustness.
The RBI has highlighted a sharp rise in the amount of fraud, even though the number of fraud cases declined. UPI’s success is not accidental, but rather stems from a combination of clear policies, robust technological infrastructure, an open ecosystem, and consumer behavior.
The architecture established by the NPCI, supported by banks and fintechs, has enabled UPI to grow extensively. The rapid expansion of QR-code merchant acceptance (for example, a 91.5% increase in QR codes to 65.8 crore in FY25) underscores its reach into micro-merchant segments.
For international observers and emerging economies, UPI provides a model for how digital payment infrastructure can leapfrog traditional card-based systems. What remains to be seen is twofold: first, ensuring that UPI maintains its leadership by advancing into higher-value payment sectors, embedded finance, credit, lending, and cross-border flows; second, safeguarding trust and security as transaction volumes increase.
If successful, UPI will not just reshape India’s payments system — it will redefine it and establish standards worldwide.
