Digital Payments Soar 11-Fold Since FY22, Targeted Steps Needed To Boost RuPay Debit Card Usage: DFS Report

Digital transactions in the country have grown nearly 11 times between FY22 and FY25, with Unified Payments Interface (UPI) accounting for around 80 per cent of the total digital transactions, as per a report released by the Department of Financial Services (DFS) under the Ministry of Finance.

The report, titled Socio-Economic Impact Analysis of the Incentive Scheme for Promotion of RuPay Debit Card and Low Value BHIM-UPI Transactions (P2M), has evaluated the outcomes of the government's incentive framework announced in FY22 and continued till FY25.

UPI Emerges as Most Preferred Mode

Amongst the users surveyed, UPI has become the most popular form of transaction, with 57 per cent of users preferring this mode of transaction over cash transactions, which stood at 38 per cent. The shift has been attributed to ease of use and instant fund transfer capability.

The study has stated, 65 per cent UPI users indicated that they make multiple digital transactions in a day. Adoption was especially strong among users aged between 18 and 25, where 66 per cent favoured UPI, indicating a significant behavioural shift towards digital-first transaction behaviour.

In addition, 90 per cent of users reported high levels of confidence in digital payments after using UPI and RuPay cards. Cashback incentives were highlighted as one of the major drivers of growth by 52 per cent of respondents, and 74 per cent said speed of payment was the main reason.

Merchant Adoption and Infrastructure Expansion

The report has highlighted near universal adoption of digital payments amongst small merchants, with 94 per cent reporting acceptance of UPI. About 72 per cent of merchants said they are happy with digital payments, citing the speed of the transaction and better record-keeping. Around 57 per cent reported increased sales after the adoption of the digital payments interface.

The number of banks running on the UPI platform also increased from 216 in March 2021 to 661 in March 2025. UPI QR deployment increased from 9.3 crore to nearly 65.8 crore during the same period, which facilitated merchant acceptance at wider levels.

Third-party application providers also grew from 16 to 38, which reflects broader participation in the ecosystem. The report mentions a fall in the lower-value currency notes and ATM withdrawals during the course of implementation, as an indication of a behavioural shift towards small-ticket digital transactions.

Incentive Outlay and RuPay Focus

The government had given an outlay of Rs 8,276 crores under the scheme during the period from FY22 to FY25. The annual outlay was Rs 1,389 crores in FY22, Rs 2,210 crores in FY23, Rs 3,631 crores in FY24, and Rs 1,046 crores in FY25.

Even though the scheme has been successful in scaling up low-value digital transactions, the report emphasises that there is a need to design specific initiatives to support the growth of RuPay Debit Card usage, particularly in rural and semi-urban areas. These initiatives include merchant enablement, promotion of low-value transactions through solutions such as UPI Lite, etc.