New Delhi, October 13 (IANS). Digital transactions contributed 99.8 percent of India’s retail payments in the first quarter of the current financial year, while paper-based instruments (cheques) have gone out of use due to policy incentives, infrastructure support and fintech penetration. This information was given in a report on Monday.
Digital payments have dominated retail transactions, led by Unified Payment Interface (UPI), Aadhaar-enabled Payment System (AEPS), Immediate Payment Service (IMPS) and other digital payments, accounting for 92.6 per cent of payment value and 99.8 per cent of transaction volume by Q1FY26.
“This shows that increasing internet penetration and smartphone usage have played a significant role in this transformation, enabling financial inclusion by bringing unbanked populations into the formal digital economy,” CareAge Analytics & Advisory said in its report.
According to the report, UPI is the main driver behind the behavioral change of increasing digital transactions, which recorded 54.9 billion transactions in Q1 FY 2026 and 185.9 billion transactions in FY 2025.
UPI transactions to grow at a CAGR of 49 per cent between FY2023 and FY2025, reflecting rapidly growing adoption and deeper penetration in Tier 2 and Tier 3 cities.
Tanvi Shah, Senior Director, CareEdge Research, said, “UPI transactions have recorded a CAGR growth of 49 per cent between FY23 and FY25, reflecting its rapid adoption with increasing internet penetration as well as its deep penetration in Tier 2 and Tier 3 cities.”
The report said that UPI is expected to continue to grow rapidly, thereby strengthening its dominance in India’s digital payments landscape.
According to the report, the share of digital transactions in personal final consumption expenditure (PFCE) has increased from 30 per cent in FY23 to 50 per cent in Q1FY26, driven by UPI adoption, policy changes and changing consumer behaviour.
Despite this growth, liquidity remains strong and its share in PFCE remains at 50 per cent.
–IANS
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