India’s digital payment ecosystem has witnessed unprecedented growth over the past six financial years, crossing 65,000 crore transactions and amounting to more than Rs. 12,000 lakh crore, according to data shared by the Ministry of Finance in Parliament.
The Ministry of Finance highlighted that this massive surge reflects the impact of focused collaboration between the Government, the Reserve Bank of India (RBI), National Payments Corporation of India (NPCI), fintech companies, banks, and State Governments. These stakeholders have been instrumental in deepening digital payment adoption, particularly in tier-2 and tier-3 cities.
A major initiative supporting this expansion has been the Payments Infrastructure Development Fund (PIDF), launched by RBI in 2021 to strengthen digital acceptance in tier-3 to tier-6 locations, North-Eastern states, and Jammu & Kashmir. As of May 31, 2025, PIDF has facilitated the deployment of 4.77 crore digital touchpoints across the country.
To track and evaluate this ongoing digitisation, the RBI introduced the Digital Payments Index (DPI), which measures the reach and effectiveness of digital transactions nationwide. Based on a base score of 100 (March 2018), the index climbed to 465.33 by September 2024, underscoring strong growth across infrastructure, usage, and access.
Several initiatives have contributed to this transformation, including the incentive scheme for promoting low-value BHIM-UPI transactions among small merchants, the Trade Receivables Discounting System (TReDS) for MSMEs, and reforms to the Merchant Discount Rate (MDR) to encourage debit card usage.
Digital payments are now playing a key role in enabling financial inclusion. For previously underserved and unserved communities, platforms like UPI offer traceable, cashless transactions, creating digital footprints that help financial institutions assess creditworthiness. This shift is enabling wider access to credit and bringing more individuals and small businesses into the formal financial system.
The expansion of digital payments has also empowered small vendors and rural merchants to accept electronic payments, reducing dependence on cash and enhancing transparency in transactions. These developments reflect not only a shift in technology usage but also a broader economic shift toward inclusivity and formalisation.
This information was provided by Minister of State for Finance Pankaj Chaudhary in a written reply to a question in the Lok Sabha on July 28, 2025.
