India’s Unified Payments Interface (UPI) has emerged as a dominant force in the country’s digital payments landscape, rapidly growing from a 34% share in 2019 to a staggering 83% by 2024. This shift, highlighted in the Reserve Bank of India’s most recent payment system report, underscores UPI’s role in transforming the way the nation transacts.
Launched in April 2016 by the National Payments Corporation of India (NPCI), UPI offers a simplified and secure payment experience by consolidating multiple bank accounts into one mobile platform. It leverages virtual payment addresses (VPAs) to facilitate quick and safe transfers, making digital payments accessible to millions across the country.
The growth trajectory of UPI has been nothing short of remarkable. Over the past five years, the platform has seen an impressive compound annual growth rate (CAGR) of 74%, cementing its position as the largest retail payment system by transaction volume in India. In 2018, UPI handled 375 crore transactions worth Rs 5.86 lakh crore. By 2024, those numbers surged to 17,221 crore transactions, amounting to Rs 246.83 lakh crore—a CAGR of 89.3% in volume and 86.5% in value.
The rapid rise of UPI has come at the expense of other digital payment methods. While systems like RTGS, NEFT, IMPS, and credit cards once accounted for 66% of digital transactions, that share has dropped to just 17%, reflecting UPI’s dominance in the space.
One of the standout aspects of UPI’s growth is its ability to “democratize” digital finance, making it accessible to a wide range of users, including those from lower-income or previously unbanked segments. This has helped push cashless payments to new heights, with fewer barriers for users to embrace the digital economy.
Breaking down the types of transactions, UPI facilitates both person-to-person (P2P) and person-to-merchant (P2M) payments. P2P payments were once the dominant transaction type in terms of volume. However, since 2023, P2M transactions have overtaken P2P in frequency, signaling a shift toward greater adoption of UPI in commercial and retail settings.
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In terms of transaction values, P2P payments remain higher than P2M, though the latter is seeing rapid growth, particularly for smaller, everyday purchases. The number of low-value transactions (under Rs 500) has surged, with P2P payments rising from 394.26 crore in 2019 to 3,649.91 crore in 2024, reflecting a 56% CAGR. However, P2M payments have outpaced this growth, skyrocketing from 291.54 crore to 9,112.72 crore, a remarkable 99% CAGR.
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Similarly, medium-value (Rs 500–Rs 2,000) transactions saw P2P volumes reach 1,420.57 crore, while P2M grew to 1,106.24 crore. In high-value payments (above Rs 2,000), P2P climbed from 151.75 crore to 1,452.81 crore, while P2M jumped from 12.02 crore to 478.55 crore—an eye-catching 109% CAGR over five years.
With UPI’s continued expansion and its increasing role in everyday transactions, it’s clear that India’s digital payment ecosystem is in the midst of a massive shift.
