Overview
The RBI’s Payment Systems Report for the half-year ending June 2025 highlights a steadily evolving payments landscape, driven by sustained growth in digital transactions across nearly all segments.
India’s move toward a cashless economy has deepened, with digital payments making up 99.7% of total transaction volume and 97.5% of total value in 2024. The momentum sustained through early 2025, underscoring India’s lead among the world’s fastest-growing digital payments markets.
Data - between December 2024 and June 2025 - highlights a strong growth in debit and credit card usage, PoS terminal transactions, and QR code-based payments. In contrast, the use of paper-based instruments such as cheques has continued to decline, highlighting the accelerating move toward a less-cash economy.
Digital Channels Now Drive Payment Systems
According to the RBI, payment systems such as Unified Payments Interface (UPI), National Electronic Funds Transfer (NEFT), Immediate Payment Service (IMPS), and Real Time Gross Settlement (RTGS) contributed to the growth of digital transactions.
(Data Source: RBI Payment Systems Report)
India’s payments landscape has undergone a sharp digital transition since 2019. Both transaction volumes and values have surged, with digital modes now accounting for nearly all payments. Paper-based instruments such as cheques have continued their steady decline, representing only 2.3% of the total transaction value.
This shift reflects broader digital adoption and the increasing maturity of the digital economy.
Divergent Leaders: UPI by Volume, RTGS by Value
UPI dominated retail payments in H1 2025, making up 85% of all transactions by volume but only 9% by value, reflecting its smaller ticket sizes.
In contrast, RTGS handled 69% of total payment value but just 0.1% of all transactions, reflecting its focus on high-value transfers.
Card Payments Reflect Evolving Consumer Preferences
While most digital payment channels grew strongly, some showed mixed trends. Usage of prepaid wallets and micro ATMs declined in the first half of 2025, likely as consumers shifted toward more seamless options like UPI and contactless cards.
The credit card segment has grown steadily, with transaction volumes rising from 208.7 crore in 2019 to 447.2 crore in 2024 and values reaching ₹20.4 lakh crore, driven largely by private banks and digital co-branded cards. In contrast, debit card transactions have declined as UPI and other digital payment modes gained popularity.
This highlights a clear shift in usage patterns - credit cards are increasingly used for online purchases and credit access, while debit cards remain primarily for cash withdrawals and everyday transactions.
Consumers are increasingly favouring seamless, integrated payment options like UPI and contactless cards over older channels such as pre-paid wallets and micro ATMs. Credit cards are gaining traction for online purchases and credit access - signalling a shift toward a more digital-first, credit-oriented payment behaviour.
Financial Markets See Broad-Based Expansion
India’s financial markets have recorded steady growth across key segments, including government securities, forex clearing, and rupee derivatives. The government securities market grew strongly in both value and volume.
Forex clearing also expanded, driven by rising cross-border trade and active currency markets, while the rupee derivatives segment maintained consistent growth.
Geopolitical Risks and India’s Response
Geopolitical risks and scenarios are increasingly influencing the future of cross-border payments, as global financial systems remain exposed to disruptions from sanctions, restrictions, and currency dependencies.
In line with its Payments Vision 2025, the Reserve Bank of India (RBI) has begun reviewing the challenges affecting the timely credit of inward cross-border remittances.
The RBI is also advancing international collaboration by linking UPI with fast payment systems in other countries and enabling QR-based payment acceptance overseas, reinforcing India’s position in the global payments ecosystem.
DhruvStar Industry Insights: What it Means for the Indian Industry
- Digital Payments Infrastructure as a Strategic Asset: With UPI now handling 85% of India’s payment transactions, the next phase of growth lies in building value-added layers (like recurring payments, smarter merchant tools, and credit-on-UPI).
- Credit Behaviour Rising: The surge in credit card use signals demand for flexible, digital-first credit products - a cue for lenders to expand offerings.
- Cross-Border Readiness: The RBI’s focus on linking UPI internationally opens a new export opportunity for Indian fintechs.
- Global Standards Push: Harmonising cross-border payment rules and data standards will help scale India’s digital payment ecosystem globally.
Sources
[1] RBI
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