Govt Report Finds Digital Payments Surge 11-Fold Under RuPay-UPI Incentive Scheme

The Department of Financial Services (DFS), Ministry of Finance, has released a major evaluation 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", underscoring the transformational role of government incentives in accelerating India's shift toward a less-cash economy.

The report was unveiled during the Chintan Shivir held on 13–14 February 2026 and presents one of the most comprehensive independent assessments of India's digital payments incentive framework since its launch.

Conducted by an independent third-party research agency in consultation with the National Payments Corporation of India (NPCI), the study evaluates the scheme's effectiveness in promoting adoption, strengthening infrastructure, and advancing financial inclusion nationwide.

Incentive Scheme: Policy Backbone of India's Digital Payments Push

The Incentive Scheme was introduced in FY 2021–22 and continued through FY 2024–25, aligned with the Government of India's objective of:

• accelerating universal adoption of digital payments

• reducing dependence on cash

• formalising routine economic activity

• ensuring affordable merchant acceptance of low-value payments

The scheme provided structured budgetary support to acquiring banks and ecosystem participants to ensure that digital payments remained accessible and sustainable for both citizens and small merchants.

Extensive National Survey Covering 15 States

The socio-economic impact analysis is based on an extensive primary survey of 10,378 respondents across 15 States, including:

• 6,167 users

• 2,199 merchants

• 2,012 service providers

The survey spanned five geographical zones — North, South, East, West and North-East — across urban and semi-urban areas.

Fieldwork was conducted between 22 July and 25 August 2025 using face-to-face Computer Assisted Personal Interviews (CAPI) to ensure high-quality and reliable data collection.

Key Findings: UPI Becomes India's Most Preferred Payment Mode

The report highlights a significant behavioural shift across socio-economic groups.

Among surveyed users:

• UPI accounts for 57% of preferred transactions

• Cash usage has declined to 38%

• Adoption is driven by ease of use and instant transfers

Digital payments now dominate daily transaction behaviour, with:

• 65% of UPI users reporting multiple digital transactions per day

UPI preference is strongest among youth:

• Adoption among the 18–25 age group stands at 66%, signalling a digital-first generational shift.

Trust and Confidence Rising, Cash Reliance Falling

The study finds:

• 90% of users reported increased confidence after using UPI and RuPay

• Declines in cash usage and ATM withdrawals were observed

Motivations for adoption include:

• Cashback incentives (52%)

• Speed of payment (74%) as the primary advantage

Merchant Adoption Near Universal: 94% Acceptance Among Small Businesses

Among merchants, digital acceptance has reached near universality:

• 94% of small merchants have adopted UPI

• 72% expressed satisfaction, citing operational convenience

• 57% reported increased sales after adopting digital payments

Merchants highlighted benefits such as:

• faster transactions

• improved record-keeping

• enhanced transparency

• reduced cash handling risks

Digital Payments Scale-Up: Transactions Up 11 Times, UPI Share Near 80%

The scheme's implementation coincided with unprecedented expansion in infrastructure and usage:

• Digital transactions increased nearly 11-fold

• UPI's share surged to ~80% of total digital transactions, making it India's primary payment rail

Infrastructure expansion was equally dramatic:

• UPI QR deployment grew from 9.3 crore to ~65.8 crore, enabling widespread merchant acceptance

• Third-party app providers increased from 16 to 38, reflecting renewed fintech participation

• Banks operational on UPI rose from 216 (March 2021) to 661 (March 2025)

The report also notes declining circulation of lower-denomination currency notes and reduced ATM withdrawals, reinforcing the behavioural transition toward low-ticket digital payments.

Government Support: ₹8,276 Crore Incentive Outlay

The Government's budgetary support under the scheme totalled ₹8,276 crore, with disbursements as follows:

• ₹1,389 crore (FY 2021–22)

• ₹2,210 crore (FY 2022–23)

• ₹3,631 crore (FY 2023–24)

• ₹1,046 crore (FY 2024–25)

These incentives enabled banks, payment system operators and app providers to scale low-value digital transactions across India.

Broader Socio-Economic Benefits

Beyond transactional growth, the report identifies wider socio-economic gains, including:

• increased formalisation through digital footprints

• enhanced transparency and accountability

• improved business efficiency for MSMEs

• stimulus to fintech innovation

• stronger financial participation across income groups

Digital payments are increasingly central to India's resilient and competitive digital economy.

Way Forward: Strengthening RuPay Debit Card Usage

While UPI adoption has accelerated sharply, the report recommends targeted interventions to boost RuPay debit card usage, particularly in rural and semi-urban areas.

Key recommendations include:

• focused merchant enablement programmes

• promotion of low-value payments through UPI Lite

• continued investment in connectivity and digital literacy

• stronger fraud risk mitigation frameworks

Policy Relevance

The findings are expected to inform future policy design and reinforce continuity of support for India's digital payments ecosystem.

The DFS report reiterates the Government's commitment to building secure, inclusive and resilient digital public infrastructure that supports economic growth and financial inclusion.

Full report available at: financialservices.gov.in