India Sees Surge in Digital Payments, 65,000 Cr Transactions in 6 Years

In a major affirmation of India’s digital financial revolution, the Union Government has reported a dramatic rise in digital payment transactions and the expansion of acceptance infrastructure across the country, particularly in tier-2, tier-3, and rural locations. The information was provided in a written response by Shri Pankaj Chaudhary, Minister of State in the Ministry of Finance, during a session in the Lok Sabha.

Between FY 2019–20 and FY 2024–25, India recorded over 65,000 crore digital payment transactions, amounting to more than ₹12,000 lakh crore (₹120 trillion). This exponential growth reflects both increased consumer adoption and concerted policy efforts to build a digitally inclusive economy, with a strong emphasis on small merchants, micro-enterprises, and underserved communities.

Building a Digital Payment Ecosystem: Multi-Stakeholder Approach

The success of India’s digital payments journey has been driven by collaborative engagement between key institutions:

• Reserve Bank of India (RBI)

• National Payments Corporation of India (NPCI)

• Public and Private Sector Banks

• Fintech players

• State Governments

These stakeholders have worked in tandem to introduce user-friendly platforms, build infrastructure, and enhance trust in digital modes of transaction.

A standout initiative is the Payments Infrastructure Development Fund (PIDF), launched by the RBI in 2021. Designed to promote the deployment of digital payment acceptance infrastructure, particularly in underpenetrated areas like tier-3 to tier-6 towns, the North-Eastern States, and Jammu & Kashmir, the scheme has seen remarkable traction.

As of May 31, 2025, the PIDF has enabled the deployment of 4.77 crore digital touch points, including QR codes, POS machines, and mobile payment gateways.

RBI’s Digital Payments Index Reflects Sustained Growth

To monitor the scale and depth of digital payment penetration, the RBI developed the Digital Payments Index (RBI-DPI), with March 2018 set as the base (Index = 100). This composite index reflects various parameters including:

• Payment enablers

• Payment infrastructure (demand and supply side)

• Payment performance

• Consumer and merchant adoption

According to the latest update, the RBI-DPI stood at 465.33 as of September 2024, underscoring consistent nationwide growth in digitisation.

Empowering MSMEs and Small Businesses

To ensure that small merchants and MSMEs are not left behind in the digital wave, the Government and regulatory bodies have launched a range of targeted interventions:

1. Incentives for Low-Value BHIM-UPI Transactions

These schemes encourage small-value, high-frequency transactions by offering financial incentives to merchants for accepting UPI payments. This has significantly increased the acceptance of QR-based payments among small vendors and informal businesses.

2. TReDS Guidelines for MSMEs

The Trade Receivables Discounting System (TReDS) allows MSMEs to discount invoices digitally, securing timely working capital from financial institutions without collateral. It reduces credit cycle risks and encourages wider formalisation.

3. Merchant Discount Rate (MDR) Rationalisation

MDR reforms ensure minimal transaction costs for small-ticket payments, making digital payment methods more attractive to small businesses.

Digital Footprints: Gateway to Financial Inclusion

One of the most profound effects of digital payments has been their ability to generate verifiable, traceable financial footprints for millions of Indians—especially in unbanked and underbanked communities.

These footprints—generated through platforms like UPI, AEPS, and mobile banking—are now being used as alternative data sources by banks and NBFCs to assess creditworthiness, even in the absence of formal income proof or credit history.

This shift has enabled:

• Broader access to formal credit

• Reduced dependency on cash-based transactions

• Inclusion of micro-entrepreneurs and gig workers into the financial system

• Digital empowerment of rural and semi-urban users

UPI at the Forefront: A Model for the World

The Unified Payments Interface (UPI) continues to serve as the backbone of India’s digital payments growth. With features like interoperability, zero MDR for users, real-time settlement, and offline payment capabilities, UPI has become the preferred transaction mode even for small roadside vendors and self-employed individuals.

Its widespread adoption has made India a global leader in instant retail payments, often cited by international financial bodies as a model of scalable and inclusive fintech innovation.

Looking Ahead: Deepening the Digital Ecosystem

While progress has been impressive, the Government is committed to broadening access and ensuring resilience in the payments ecosystem. Future goals include:

• Wider deployment of offline UPI solutions for areas with poor connectivity

• Expansion of the Account Aggregator framework to streamline access to credit

• Further strengthening of cybersecurity and fraud detection systems

• Promotion of digital financial literacy, particularly for rural and elderly populations

“Digital payments have not only enhanced financial efficiency but have empowered citizens and small businesses alike. They are a cornerstone of our efforts to build a transparent, inclusive, and digitally enabled economy,” said Shri Pankaj Chaudhary.