UPI Overtakes Cash as India’s Most Preferred Payment Mode: Survey

Unified Payments Interface (UPI) has emerged as the most preferred mode of transaction in India, accounting for 57 per cent of payments, while cash now stands at 38 per cent, according to a recent survey.

The findings were released by the Department of Financial Services (DFS), Ministry of Finance, in a report titled ‘Socio-Economic Impact Analysis of the Incentive Scheme for Promotion of RuPay Debit Card and low-value BHIM-UPI (Person-to-Merchant) transactions' during the Chintan Shivir held last week.

The study was conducted by an independent third-party research agency in consultation with the National Payments Corporation of India (NPCI). It evaluated how government incentives have strengthened payment infrastructure and advanced financial inclusion across the country.

As noted in the official communication, “The Incentive Scheme was conceptualised as part of the Government of India's broader policy objective of accelerating universal adoption of digital payments, reducing dependence on cash, and formalising routine economic activity,” a release said.

Introduced in FY 2021-22 and continued through FY 2024-25, the scheme provided structured budgetary support to banks and ecosystem participants, ensuring that digital payments remained affordable and accessible.

What was the survey methodology?

The socio-economic impact analysis was based on a primary survey covering 10,378 respondents across 15 states. The sample included 6,167 users, 2,199 merchants, and 2,012 service providers, representing major stakeholders in India’s digital payments ecosystem.

Researchers adopted a comprehensive framework spanning five geographical zones --- North, South, East, West, and North-East --- covering urban and semi-urban locations. Fieldwork was conducted between July 22 and August 25, 2025, using face-to-face Computer Assisted Personal Interviews (CAPI) to ensure accuracy and reliability.

The findings indicate that digital payments now dominate daily transaction behaviour. Around 65 per cent of UPI users reported making multiple digital transactions every day, reflecting growing dependence on mobile-based payments.

Adoption is particularly strong among younger users. In the 18–25 age group, UPI usage stands at 66 per cent, pointing to a generational shift towards digital-first financial habits.

The survey also shows rising confidence in digital systems. Nearly 90 per cent of users said they felt more secure using UPI and RuPay cards, while cash usage and ATM withdrawals have declined significantly.

Incentives continue to play a major role in encouraging adoption. About 52 per cent of users cited cashback offers as a key motivator, while 74 per cent identified speed as the main advantage of digital payments.

What is the road ahead?

Among merchants, digital acceptance has reached near-universal levels. The survey found that 94 per cent of small merchants now accept UPI payments, signalling widespread integration of digital tools into local businesses.

Around 72 per cent of merchants expressed satisfaction with digital transactions, highlighting benefits such as faster settlements, improved record-keeping, and greater operational convenience. Meanwhile, 57 per cent reported an increase in sales after adopting digital payments.

The report underscores that incentives have been crucial in reducing cost barriers for merchants and acquiring banks. They have helped accelerate onboarding, improve trust, and expand digital access across income groups and regions.

During the implementation period, India witnessed a sharp expansion in digital infrastructure. Digital transactions increased nearly eleven times, while UPI’s share in total digital payments surged to 80 per cent.

UPI QR code deployment also grew dramatically, rising from 9.3 crore to 65.8 crore, enabling wider merchant participation and smoother customer experiences.

The government’s budgetary support of Rs 8,276 crore has been central to this growth. Incentive disbursements stood at Rs 1,389 crore in FY 2021-22, Rs 2,210 crore in FY 2022-23, Rs 3,631 crore in FY 2023-24, and Rs 1,046 crore in FY 2024-25. These funds supported banks, payment operators, and app providers in scaling low-value digital transactions nationwide.

The study concludes that its findings will help shape future policy and ensure continued support for India’s digital payments ecosystem. It reinforces the government’s commitment to building resilient, inclusive, and secure digital public infrastructure that promotes economic growth and financial inclusion.

(With inputs from ANI)