New Delhi, Feb 16 (.) India’s digital payments ecosystem has witnessed an unprecedented expansion over the past four years, with transactions growing nearly eleven-fold and UPI emerging as the dominant mode of payment, accounting for around 80 per cent of total digital transactions, according to a report released by the Department of Financial Services (DFS).
The report ‘Socio-Economic Impact Analysis of the Incentive Scheme for Promotion of RuPay Debit Card and low-value BHIM-UPI (Person-to-Merchant) transactions’ evaluates the socio-economic impact of the incentive scheme for RuPay Debit Cards and low-value BHIM-UPI (Person-to-Merchant) transactions.
The findings were presented during the Chintan Shivir 2026 held on February 13–14.
The report highlights that the incentive scheme, launched in FY 2021-22 and extended through FY 2024-25, played a crucial role in accelerating digital payment adoption across the country.
The scheme provided financial support to banks and payment ecosystem partners to promote small-value digital transactions and expand acceptance infrastructure, particularly among small merchants.
According to the findings, digital transactions recorded an almost eleven-fold increase during the scheme period.
UPI’s share in total digital transactions rose sharply to approximately 80 per cent, underlining its position as the backbone of India’s digital payment ecosystem. The rapid scale-up reflects growing consumer trust and widespread merchant acceptance.
The expansion of digital acceptance infrastructure has been equally significant. The number of UPI QR codes deployed across the country surged from about 9.3 crore in March 2021 to nearly 65.8 crore by March 2025.
During the same period, the number of banks live on the UPI platform increased substantially from 216 to 661, indicating deeper institutional participation and ecosystem maturity.
The impact assessment was based on primary data collected from over 10,000 respondents across 15 states, covering users, merchants and other stakeholders.
The survey results indicate a major behavioural shift in payment preferences. UPI has overtaken cash as the most preferred mode of transaction, accounting for 57 per cent of user transactions compared to 38 per cent for cash.
The report notes that nearly 65 per cent of UPI users make multiple digital transactions daily, reflecting routine integration of digital payments into everyday financial activities. The adoption trend is particularly strong among younger users in the 18–25 age group, suggesting long-term structural changes in consumer payment behaviour.
Confidence in digital payments has also strengthened significantly. Around 90 per cent of users reported increased trust in digital payment systems after using UPI and RuPay cards.
On the merchant side, approximately 94 per cent of small merchants surveyed confirmed that they now accept UPI payments, citing benefits such as faster transactions, improved transparency, easier record-keeping, and enhanced sales.
Cashback incentives and seamless transaction experiences were identified as key factors encouraging users to shift from cash to digital modes. The scheme helped offset costs for banks and ecosystem participants, making low-value digital transactions commercially viable and attractive.
Over the duration of the scheme, the government allocated ₹8,276 crore in budgetary support to sustain and scale up digital payment adoption.
The report underscores that beyond transactional growth, the initiative has contributed to broader socio-economic outcomes, including greater formalisation of the economy, improved transparency, enhanced financial inclusion, and stronger fintech innovation.
Looking ahead, the report recommends targeted measures to boost RuPay Debit Card usage, especially in rural and semi-urban regions. It also emphasises continued investment in digital literacy, cybersecurity, connectivity infrastructure, and innovative solutions such as lightweight payment options to further strengthen inclusion and trust.
The findings reinforce the government’s broader vision of building a resilient, inclusive, and secure digital public infrastructure, positioning India as a global leader in digital payments while supporting sustained economic growth and financial empowerment. . SAS .