UPI’s Dominance in India’s Digital Payments Landscape

In 2024, the Unified Payments Interface (UPI) solidified its position as the cornerstone of India’s digital payment ecosystem, accounting for 83% of all digital transactions, a significant rise from 34% in 2019. This surge underscores UPI’s rapid adoption and the declining reliance on traditional digital payment methods.

Exponential Growth Over Five Years

Transaction Volume: India witnessed a remarkable increase in digital payment transactions, recording over 208.5 billion in 2024 alone.

UPI’s Ascendancy: The share of other digital payment methods, such as National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS), Immediate Payment Service (IMPS), and credit and debit cards, declined from 66% in 2019 to 17% at the end of 2024.

Divergence in P2M and P2P Transactions

Person-to-Merchant (P2M): UPI P2M transactions, especially those below ₹500, grew at a compound annual growth rate (CAGR) of 99% between 2019 and 2024. For transactions exceeding ₹2,000, the CAGR was even higher at 109%.

Person-to-Person (P2P): In contrast, UPI P2P transactions saw a CAGR of 56% for amounts under ₹500 and 57% for those above ₹2,000 during the same period.

Introduction and Impact of UPI Lite

To facilitate low-value transactions, the National Payments Corporation of India (NPCI) introduced UPI Lite. By December 2024, UPI Lite was processing approximately 2.04 million transactions daily, with a total daily value of ₹20.02 crore. The average transaction size increased from ₹87 in December 2023 to ₹98 in December 2024, marking a 13% year-on-year growth.

Decline in Prepaid Payment Instruments (PPIs)

While UPI’s growth trajectory remained robust, PPIs, including digital wallets, experienced a downturn. In the second half of 2024, PPI transaction volumes decreased by 12.3% to 3.45 billion, and the transaction value declined by 25% to ₹1.08 trillion compared to the same period in the previous year.

Summary of the news

Key Point	Details
Why in News	UPI accounted for 83% of India’s digital payments in 2024, a sharp rise from 34% in 2019, with 208.5 billion transactions.
UPI Lite Introduction	Launched by NPCI for low-value transactions; processed 2.04 million daily by December 2024, worth ₹20.02 crore.
Decline in PPIs	Prepaid Payment Instruments saw a 12.3% drop in transaction volume and 25% in value during H2 2024.
Growth in P2M Transactions	CAGR of 99% for transactions below ₹500 and 109% for amounts above ₹2,000 between 2019-2024.
Growth in P2P Transactions	CAGR of 56% for transactions below ₹500 and 57% for amounts above ₹2,000 in the same period.
Average UPI Transaction Size	Increased from ₹87 (Dec 2023) to ₹98 (Dec 2024), reflecting 13% annual growth.
NPCI	National Payments Corporation of India, the organization behind UPI and UPI Lite.
Comparison of Payment Methods	UPI overtook NEFT, RTGS, IMPS, and card payments, which collectively fell to 17% by 2024.