Is digital payments through UPI becoming more popular than physical cash in India?
In an effort to benchmark a payment strategy in India, it is crucial to adopt a framework that mirrors India's unique digital payments ecosystem and its rapid expansion, particularly as the Unified Payments Interface (UPI) continues to transform the nation's payments landscape.
UPI, a global benchmark for real-time payments, has processed over 10 billion transactions recently and has a high penetration across urban and rural sectors. The massive growth of UPI, from 92 crore transactions in FY18 to over 8,375 crore in FY23, worth ₹139 lakh crore, indicates a robust digital payment infrastructure that underpins financial inclusion and efficiency.
To effectively benchmark a payment strategy, consider metrics that reflect UPI’s strengths and India’s digital payments dynamics. These metrics include transaction volume and growth rate, transaction value, real-time processing capability, interoperability, financial inclusion impact, user experience, security, and fraud prevention.
In addition to these metrics, it is essential to incorporate benchmarking against global and domestic standards. Comparing UPI’s real-time and interoperability features with global payment systems helps gauge competitiveness. Aligning with Central Bank Payments Benchmarks that emphasize instant payment adoption, RTGS system upgrades, and ISO 20022 messaging standards ensures future-proofing of the strategy.
Furthermore, evaluating infrastructure and ecosystem support is crucial. Analyzing the digital infrastructure supporting payments, such as internet penetration, smartphone adoption, and the presence of Common Service Centres (CSCs) facilitating rural access, is essential. Considering government initiatives under Digital India that have broadened digital connectivity—a key driver for UPI’s adoption and the overall payment strategy’s scalability—is also important.
Lastly, focusing on innovation and continuous improvement is key. Keeping track of UPI’s feature expansion, such as integration with wearables, QR codes, and cross-border payment initiatives, is essential. Benchmarking against the pace of innovation within India’s ecosystem and emerging trends in central bank digital currencies (CBDCs) or bilateral payment links is also crucial.
In summary, by benchmarking against these criteria, payment strategies can be aligned with the rapid evolution and maturity of UPI and India’s broader digital financial ecosystem, ensuring competitiveness and inclusivity in a global context. This approach provides a comprehensive framework to measure and guide payment strategies effectively amidst India’s dynamic payment landscape.
As of June 2025, the number of banks live on UPI increased from 602 to 675. The number of transactions on UPI in June 2025 was 18.4 billion, a 32% YoY increase from June 2024's 13.8 billion. Indians are shifting away from cash for international spending towards cards and digital wallets. The average transaction value (ATV) on UPI decreased by -10% YoY in June 2025, continuing a trend of decreasing ATV for several years. UPI is experiencing ongoing growth and is seen as a model for real-time payments around the world.
In the context of benchmarking a payment strategy in India, it's imperative to assess transaction volume and growth rate, transaction value, real-time processing capability, security, and fraud prevention, drawing parallels with UPI's robust performance. Furthermore, evaluating the infrastructure supporting payments, such as internet penetration, smartphone adoption, and government initiatives under Digital India, can provide insights into the strategy's scalability and competitiveness.
