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UPI's dominance in payments landscape: What data shows

The growth trajectory is likely to continue and the digital payment market is likely to triple by 2026, according to a BCG-PhonePe report (Photo: Mint)Premium
The growth trajectory is likely to continue and the digital payment market is likely to triple by 2026, according to a BCG-PhonePe report (Photo: Mint)

Since its launch in 2016, the UPI-based payment system has become one of the most popular modes of payments due to its ease of use, reliability and security. So much so that three in every four digital financial transactions in the country are now UPI-based

A recent discussion paper by the Reserve Bank of India sought feedback on the idea of levying charges on digital payments, including on UPI. The ministry of finance on Sunday rejected the idea, calling UPI a "digital public good". The ministry's clear stance is telling: since its launch in 2016, the UPI-based payment system has become one of the most popular modes of payments due to its ease of use, reliability and security. So much so that three in every four digital financial transactions in the country are now UPI-based.

The surge has been aided by pandemic-led changes in customer's preferences, growing acceptance by merchants and fintech innovation. The growth trajectory is likely to continue and the digital payment market is likely to triple by 2026, according to a BCG-PhonePe report.

While stakeholders involved in the payments infrastructure say the rise in UPI further necessitates transaction charges to cover costs, the flip side is that such levies could also discourage a digital payments phenomenon whose ubiquity has taken over India in the last year or so.

Imposing a charge would have hindered the plans of universal digitization. Mint explores why UPI matters:

UPI's dominance in payments landscape
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UPI's dominance in payments landscape
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