The Unified Payments Interface (UPI) has dramatically increased its share of India’s digital payments from 34% in 2019 to an impressive 83% in 2024, according to the Reserve Bank of India’s (RBI) latest payment system report. This remarkable growth represents a cumulative average growth rate (CAGR) of 74% over the past five years.
In contrast, other payment systems, including RTGS, NEFT, IMPS, credit cards, and debit cards, have seen their share in digital payments volume decline from 66% to 17% during the same period. The report highlights UPI’s significance in driving the growth of digital payments in India due to its utility and ease of use.
At a macro level, the volume of UPI transactions soared from 3.75 billion in 2018 to an astounding 172.21 billion in 2024, while the total value of transactions surged from $79.35 billion (₹5.86 trillion) in 2018 to $3.34 trillion (₹246.83 trillion) in 2024. This represents a five-year CAGR of 89.3% in transaction volume and 86.5% in transaction value.
UPI’s secure and real-time payment capabilities have significantly benefited both P2P (person-to-person) and P2M (person-to-merchant) transactions, simplifying financial transactions for individuals and businesses without relying on traditional methods.
Interestingly, UPI P2M transaction volumes have surpassed UPI P2P transaction volumes since 2023. However, in terms of transaction value, UPI P2P transactions remain higher than UPI P2M transactions.
Over the past few years, digital payments in India have seen phenomenal growth, driven by the success of UPI and the array of digital payment options available. In 2024 alone, India recorded a staggering 208.5 billion digital payment transactions.
For transactions below $6.60 (₹500), UPI P2M grew at a CAGR of 99% over 2019-24, while UPI P2P grew at a CAGR of 56% during the same period. For higher ticket-sized transactions—those exceeding $26.39 (₹2,000)—UPI P2M grew at a CAGR of 109%, while UPI P2P recorded a CAGR of 57% over the five years.
The National Payments Corporation of India’s (NPCI) low-value transaction payment method, UPI Lite, recorded 2.04 million transactions daily, valued at $2.64 million (₹20.02 crore) in December 2024.
“When Paytm and PhonePe introduced UPI Lite on February 15, 2023, and May 2, 2023, respectively, there was a sustained increase in UPI Lite payment volumes and values,” the RBI report observes.
The report further notes that UPI has propelled India to the forefront of digital payment solutions as a ‘public good.’ This approach has the potential to be adopted by other economies, regardless of their stage of development. UPI and its features offer lessons on democratizing the payment system to the smallest value and penetrating digital payments to previously unreached segments.
