India’s payment ecosystem is witnessing a major shift, with digital modes now becoming the primary choice for both consumers and businesses across the country.
The Unified Payments Interface (UPI) has firmly established itself at the centre of India’s retail payments system, marking a phase of strong structural maturity, according to a report by CareEdge.
The report stated, “digital payments now account for 93 per cent of payment value and 99.8 per cent of transaction volume as of 9MFY26.” It also noted that traditional payment methods such as debit cards and prepaid instruments are either stable or declining, as UPI continues to replace low-value transactions nationwide.
While UPI leads in transaction volume, other systems like NEFT, IMPS, and NACH continue to play important roles, especially for high-value and bulk transactions. NEFT remains widely used for mid-to-high-value payments, with an average ticket size of around ₹48,289 as of January 2026. In comparison, the average UPI ticket size stood at ₹1,298 during the same period.
“UPI has become the default rail for retail payment volumes, rising from 73.6 per cent in FY23 to 86 per cent in FY26E, with other modes now marginal,” the report stated. It added that the ecosystem is steadily moving toward UPI, with further growth expected in the coming years.
“UPI has emerged as a global leader, accounting for nearly 49 per cent of global real-time payment volumes, and powers the world’s largest real-time payment system in India. UPI has transformed domestic payments and is now expanding internationally with presence across multiple countries and over 2 million international merchants, setting the benchmark for digital payment systems worldwide,” said Tanvi Shah, Senior Director at CareEdge Advisory.
The shift in user behaviour is also visible in the reduced use of physical payment tools. While credit cards remain popular for e-commerce and high-value spending, debit cards and prepaid payment instruments are losing relevance for daily transactions.
Government and central bank initiatives are supporting this transition. Programmes like the Payments Infrastructure Development Fund (PIDF) are helping expand digital payment adoption in underserved areas, especially in Tier-II and Tier-III cities.
IMPS continues to grow but remains behind UPI due to wider merchant acceptance. NACH also plays a key role in bulk payments such as salaries, subsidies, and dividends. “NEFT and IMPS still dominate with a majority share, but their share has declined gradually compared to FY23. UPI (including BHIM) has emerged as a key driver of structural growth, increasing its value share,” the report added.
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