UPI grows 30% in FY 26, likely to record 240 billion transactions

UPI likely to touch 240 billion transactions in FY 26

• UPI transactions projected to reach 240 billion in FY 26
• Fintechs urge government to reintroduce MDR for large merchants
• Government UPI payment subsidies have fallen in recent years

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The country’s most popular digital payments platform, the Unified Payments Interface (UPI) is likely to touch 240 billion transactions in FY 26, compared with 185 billion in FY 25.

This represents a growth of almost 30 percent year-on-year, compared with last fiscal year’s growth rate of 41 percent, according to data from the National Payments Corporation of India (NPCI), which operates UPI.

UPI recorded 131 billion transactions during FY 24.

The growth was achieved even as the government subsidies for small-value UPI merchant payments have been coming down over the last couple of years.

Lower subsidies

The government has allocated Rs 2,200 crore as UPI subsidies for FY 26, but is yet to release the money with less than a week to go for the financial year closure.

This has fintechs and payments firms worried as to whether this will be disbursed at all during this year, as reported by Moneycontrol earlier.

During FY 25, according to industry estimates, the actual payout remained at Rs 1,050 crore, compared with the budgetary promise of Rs 2,000 crore and the government's announcement of Rs 1,500 crore.

New benchmarks

During the current financial year, the average daily UPI transactions stood at 657 million, compared to 506 million in FY 25.

UPI had crossed 800 million daily transactions for the first time in March. It crossed 700 million daily transactions only six months ago in the first week of August.

The government and NPCI have set a billion (100 crore) transactions a day goal for UPI, which seems closer with the platform set to reach the target sometime next financial year with the current rate of growth.

Request for MDR

Fintechs and the payment firms are requesting the government to implement Merchant Discount Rate (MDR) for UPI payments.

MDR is the fee that banks collect from merchants at the point of sale for facilitating digital payments. UPI MDR was 30 basis points before it was waived off by the government in 2020. One basis point is one-hundredth of a percentage point.

The industry believes MDR will be a long-term solution for payment firms to generate revenue, rather than relying on government subsidies.

Fintechs are requesting the reintroduction of 30bps or 0.3 percent as MDR on UPI payments for large merchants. Large merchants are those with an annual turnover exceeding Rs 40 lakh.