INDIA’S DIGITAL PAYMENT TRANSFORMATION: A DECADE OF UPI GROWTH, FINANCIAL INCLUSION AND EMERGING CHALLENGES

Abstract

The study researches patterns in digital payment adoption in India by focusing on the influence of factors and constraints in the elapsed time since 8 November 2016, which made India take the first step towards achieving a less-cash economy (RBI, 2016). An analysis is used on an all-secondary source of data that includes RBI, NPCI, PIB, and multiple reports from PwC, Worldline, and IMF. The study analyses the growth curve of UPI, along with other modes of payment between Fiscal Year (FY) 2016-17 and FY 2025-26. The key observations include: from approximately 2 crore transactions in FY 2016-17, UPI transactions peaked at over 24,162 crore transactions in FY 2025-26, the RBI-DPI, which grew over quadrupled from March 2019 to March 2024, and UPI accounts for over four fifths of total retail transaction volume. As against DPI, FI Index pace is much slower, and instances of fraudulent transactions, even though fraud losses reduced in 2022, continue to pose a problem. Also, nearly four fifths of the UPI space remains dominated by two apps. The Indian digital payment ecosystem not only stands tall for real-time transactions globally, yet, for meaningful financial inclusion and robust infrastructure for preventing fraud, and controlling concentration of players, policymakers and the industry are on an incomplete task.