Digital payments in India surge 35%, UPI leads growth
What's the story
India's digital payment ecosystem has witnessed a massive boom in the fiscal year 2024-25, according to the Reserve Bank of India (RBI)'s FY25 annual report.
The total volume of digital transactions surged by 34.8%, while their value increased by 17.9%.
Retail digital payments also observed similar trends, with a whopping 34.9% jump in volume and a more modest but still significant 16.1% rise in value during this period.
UPI's impact
UPI dominates retail digital payment volumes
The Unified Payments Interface (UPI) has been a major driver of this growth, recording an impressive 41.7% increase in volume and a 30.3% rise in value.
The report revealed that UPI accounted for a staggering 84% of total retail digital payment volumes.
Other transaction modes like National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS) also saw significant growth.
NEFT transactions were up by 32.4% in volume and 13.4% in value, while RTGS transactions rose by 12% and 17.8%.
Transaction dominance
Digital transactions dominate non-cash retail payments
Digital transactions have taken over the non-cash retail payment space, accounting for a whopping 99.9% of all such transactions. This is a slight increase from last year's figure of 99.8%.
The RBI also noted that the currency-deposit ratio has dropped to 15.4% as of March 21, from last year's number of 15.9%.
This change reflects the growing trend toward digital payments in India.
Service enhancements
RBI's initiatives to enhance UPI services
To make UPI services more accessible and user-friendly, the RBI has introduced a number of features.
These include Delegated Payments, UPI integration with Cash Deposit Machines (CDMs), PPI access via third-party UPI apps, and auto-replenishment for balances in UPI Lite, FASTag, and NCMC.
The central bank also raised transaction limits across all categories, including a ₹5 lakh cap on tax payments through UPI.
Security measures
Expanding UPI's international reach
The RBI has also expanded the international reach of UPI by enabling QR-based payments in countries such as France, Nepal, Mauritius, and Sri Lanka.
It joined Project Nexus, a Bank for International Settlements (BIS)-led effort to connect India's UPI with fast payment systems in the Association of Southeast Asian Nations (ASEAN) countries.
To strengthen security against phishing attacks, the central bank has proposed dedicated domains like .bank.in and .fin.in.
Accessibility initiatives
RBI promotes accessibility for persons with disabilities
The RBI has also issued guidelines to make digital payment services more accessible for persons with disabilities.
In a parallel move, it has been promoting the adoption of the central bank digital currency (CBDC-R).
The value of the digital rupee in circulation grew by a whopping 334% year-on-year (YoY), from ₹234.04 crore in FY24 to ₹1,016.46 crore in FY25.