India’s Digital Payment Boom: Over ₹12,000 Lakh Crore in 65,000 Crore Transactions

India has witnessed a massive surge in digital payments over the past six years, with more than 65,000 crore digital transactions conducted between FY20 and FY25, amounting to a staggering ₹12,000 lakh crore, the Government informed Parliament on Monday.

Government’s Multi-Stakeholder Approach to Digital Adoption

In a written response to the Lok Sabha, Minister of State for Finance Pankaj Chaudhary highlighted that the government has adopted a collaborative strategy to boost digital payment adoption across India. He stated, "The government has been working closely with stakeholders including the Reserve Bank of India (RBI), National Payments Corporation of India (NPCI), fintech companies, banks, and state governments to boost digital payment adoption, particularly in Tier-2 and Tier-3 cities."

Payments Infrastructure Development Fund (PIDF): Bridging the Digital Divide

As part of the effort to deepen digital penetration in underbanked regions, the RBI launched the Payments Infrastructure Development Fund (PIDF) in 2021. The scheme was designed to incentivize the deployment of digital payment acceptance infrastructure across Tier-3 to Tier-6 cities, including Jammu & Kashmir and the northeastern states.

As of May 31, 2025, the initiative had successfully led to the deployment of around 4.77 crore digital touchpoints, creating a robust foundation for digital transactions at the grassroots level.

Digital Payments Index Reflects Growing Digitisation

To accurately measure the momentum of digital payments, the RBI developed the Digital Payments Index (DPI), which tracks the adoption, infrastructure, and performance of payment systems across the country. According to the latest data, "The index stood at 465.33 as of September 2024, indicating sustained growth in adoption, infrastructure, and overall performance."

This consistent increase in DPI demonstrates India's upward trajectory in digital transformation and its journey towards a less-cash economy.

UPI: Driving Financial Inclusion and Cashless Transactions

The minister further acknowledged the significant role of Unified Payments Interface (UPI) in democratizing digital payments. "Platforms like UPI have empowered citizens—including small vendors and rural users—to accept digital payments, thereby reducing reliance on cash and bringing more people into the formal financial ecosystem."

This digital trail not only reduces transaction friction but also aids in generating digital financial footprints, which in turn enhance access to formal credit and improve economic participation, especially among micro-entrepreneurs and small vendors.

Supporting MSMEs: Policy and Platform Interventions

To support Micro, Small and Medium Enterprises (MSMEs) and encourage wider use of digital payments, the government has introduced several measures:

• Merchant Discount Rate (MDR) rationalisation on debit card transactions

• TReDS guidelines to help MSMEs avail competitive invoice discounting

• Incentive schemes to boost low-value BHIM-UPI transactions among small merchants

These initiatives are part of a broader push to integrate MSMEs into the digital and formal economy, unlocking new credit avenues and operational efficiencies.

Conclusion

India’s digital payment journey over the past six years reflects a significant transformation in how financial transactions are conducted. With over ₹12,000 lakh crore in 65,000 crore digital transactions recorded, India has emerged as a global leader in digital payments.

The coordinated efforts of the government, RBI, NPCI, and private stakeholders have laid the groundwork for a secure, inclusive, and scalable digital payment ecosystem. Schemes like PIDF, combined with tools like UPI and BHIM, are ensuring that even the smallest merchants in the remotest villages are connected to the formal financial system.

With digital literacy and infrastructure continually expanding, the country is well on its way to achieving a cash-light economy that boosts transparency, inclusion, and economic resilience.