Digital Payments Surge Under RuPay–UPI Incentives: DFS Report

New Delhi, Feb 16 (KNN) The Department of Financial Services (DFS) has released a report titled ‘Socio-Economic Impact Analysis of the Incentive Scheme for Promotion of RuPay Debit Card and Low-Value BHIM-UPI (Person-to-Merchant) Transactions’ during a Chintan Shivir held on 13–14 February 2026.

The study, conducted by an independent research agency in consultation with the National Payments Corporation of India (NPCI), evaluated the effectiveness of the government’s incentive framework in expanding digital payments, strengthening infrastructure and promoting financial inclusion.

Rising Adoption of Digital Payments

The report indicates a significant shift towards digital transactions. Among surveyed users, Unified Payments Interface (UPI) accounted for 57 per cent of transactions, surpassing cash at 38 per cent. About 65 per cent of users reported making multiple digital payments daily.

Adoption was highest in the 18–25 age group at 66 per cent. Nearly 90 per cent of users said their confidence in digital payments increased after using UPI and RuPay cards. 

Cashback incentives were cited as a key motivator by 52 per cent of respondents, while 74 per cent identified transaction speed as the primary advantage.

Scheme Framework and Survey Coverage

Launched in FY 2021–22 and continued until FY 2024–25, the scheme provided budgetary support to acquiring banks and ecosystem participants to ensure digital payments remained affordable and sustainable.

The evaluation was based on a primary survey of 10,378 respondents across 15 States. Participants included users, merchants and service providers from urban and semi-urban areas across five geographical zones.

Merchant Integration and Ecosystem Expansion

Merchant adoption reached 94 per cent among small businesses, with 72 per cent expressing satisfaction and 57 per cent reporting increased sales after adopting digital payment systems. 

The study notes that incentives helped reduce cost barriers, accelerate onboarding and build trust across regions and income groups.

During the scheme period, digital transactions increased nearly elevenfold, with UPI accounting for around 80 per cent of total digital transactions. UPI QR deployment expanded from 9.3 crore to nearly 65.8 crore. 

The number of third-party app providers grew from 16 to 38, while banks on the UPI platform increased from 216 in March 2021 to 661 by March 2025.

The report also observed a decline in lower-denomination currency usage and ATM withdrawals, indicating greater reliance on small-ticket digital payments.

Future Recommendations

Beyond transaction growth, the study highlights improvements in formalisation, transparency, business efficiency and fintech innovation. 

It recommends targeted measures to strengthen RuPay debit card usage in rural and semi-urban areas, promote low-value solutions such as UPI Lite, and continue investments in connectivity, digital literacy and fraud risk mitigation to sustain momentum in India’s digital payments ecosystem.

(KNN Bureau)