Retail digital payments zoom 100x in 12 years, thanks to UPI

UPI now constitues 83% of all digital retail transactions

Retail digital payments in India have grown 100-fold over the last 12 years, with the bulk of the growth credited to the popular Unified Payments Interface (UPI).

From 1.6 billion in FY13, digital transactions grew to 164 billion in FY24, the Reserve Bank of India's (RBI’s) biannual Payments System Report, released on January 27 evening, has said.

Most of the volume growth happened due to the popularity and adoption of UPI, which allows instant real-time payments across multiple banks. The platform’s compounded annual growth rate over the past year was a staggering 90 percent.

“UPI has emerged as the most used and preferred payment channel and has revolutionised India's payment ecosystem by consolidating multiple bank accounts into one mobile interface. UPI's real-time, user-centric functions democratise payments and extend digital payments to previously unreached segments,” the RBI report said.

UPI processed 172 billion transactions worth over Rs 245 lakh crore in 2024. It also accounted for 83 percent of all digital transactions in 2024, compared to just 34 percent five years ago. There were more than 63 crore UPI addresses as of December. The number of unique UPI users is estimated to be under 40 crore.

The payment system has been popularised by mobile apps such as PhonePe, Google Pay, Paytm, Cred and Amazon Pay.

UPI is already the world’s largest real-time payments platform processing over 500 million transactions a day and around 16 billion transactions in a month.

Role of other digital payments

Credit cards continue to be popular among the wealthier segments, with the number of active cards almost doubling in five years from 5.5 crore cards in December 2019 to 10.8 crore in December 2024.

Most prolific credit card users tend to have more than one card and the unique credit card users are around 4.5 crore, according to estimates by various bankers.

In 2024, there were 4.5 billion credit card transactions worth Rs 20.37 lakh crore.

There were close to 100 crore debit cards in the country, which registered around 1.8 billion transactions worth around Rs 5.1 lakh crore.

In 2024, there were seven billion prepaid payment instrument (PPI) transactions worth Rs 2.23 lakh crore through various mobile wallets, gift cards and vouchers.

Immediate Payment System (IMPS), the predecessor to UPI, registered 6 billion transactions in 2024 worth Rs 70.71 lakh crore.

Focus on cross-border payments

International money transfers including payments are of particular focus for the RBI, as the country is the largest recipient of inward remittances worth around $129 billion annually and growing at a rapid pace.

“The overall trend points to a gradual decrease in the cost of sending remittances to India. This reflects ongoing efforts towards making remittance transfers more affordable, in alignment with global objectives to enhance financial inclusivity for migrant communities,” the RBI report said.

The central bank has been doubling its efforts to reduce the cost by connecting different national and regional payment systems for smoother cross-border flows.

According to the regulator, this is being done through several legal, regulatory and supervisory frameworks that help in harmonising regulations and supervisory practices across jurisdictions to streamline processes.

While there are multiple concerns about money laundering in international transfers, the RBI is trying to address this with cross-border data exchange and messaging standards to facilitate seamless information exchange, the report said.