Evaluating the Growth of UPI in India: A Case Study on
Digital Payment Evolution (2016–2024)
Abstract:
This case study evaluates the growth trajectory of the Unified Payments Interface (UPI) in India, analyzing its
expansion from 2016 to 2024, with a focus on transaction volumes and values. Introduced by the National
Payments Corporation of India (NPCI), UPI has reshaped India’s digital payment ecosystem by facilitating
instant, bank-to-bank transfers in real time. Its adoption skyrocketed during the COVID-19 pandemic, as the
demand for contactless payments grew. Starting with 2.65 million transactions valued at ₹893.07 crores in
2016, UPI has experienced exponential growth, with transaction volumes projected to surpass 108 billion by
2024, amounting to a total value of ₹1,57,88,817.25 crores annually. This growth reflects UPI’s increased
presence across multiple sectors and its growing role in enabling large-scale transactions. Key factors driving
UPI’s growth include digital adoption, government support, rising smartphone penetration, and the system’s
ease of use. The study highlights UPI’s transformation from a peer-to-peer transaction tool into a broad
infrastructure supporting retail, government, and corporate payments, showcasing its impact on India’s
financial landscape.
A notable accomplishment of UPI is its contribution to financial inclusion. UPI has extended digital
financial services to underserved and unbanked populations, furthering financial accessibility. Integration with
government programs has enabled direct benefit transfers, minimizing inefficiencies and enhancing
transparency. UPI’s penetration into rural areas has bridged the financial access gap between urban and rural
regions. However, UPI still faces challenges, such as cybersecurity risks, regulatory complexities, and the
need for ongoing technological improvements. Addressing these challenges and exploring future opportunities
will be essential for sustaining UPI’s growth and ensuring its continued effectiveness.
Introduction
The progress of a country's financial institutions is crucial to its economic development. As a result, an economy's
banking sector serves as a catalyst for the overall growth and development of the economy. Today, all Indian
banks are incorporating various technological innovations into their existing business models and attempting to
implement growth- and customer-oriented plans and strategies rather than profit-oriented plans and strategies .
Prior to 2016, India's banking system relied on traditional methods of fund transfer such as RTGS, NEFT,
IMIMPS, and so on. The emergence of a more standardized payment platform was required due to the complexity
of the Case Study-based and the rigid system of money supply. Furthermore, India's digital India initiative
requires the banking sector to adhere to a digitally covered ecosystem centered on Case Studyless and cashless
economies. Thus, various types of digital payment modes emerged in the banking sector landscape, and the
Unified Payment Interface was one of them. The National Payments Corporation of India (NPCI) created the
Unified Payment Interface, and its operations are governed by the Reserve Bank of India (RBI). It is a payment
system that enables interbank fund transfers and serves as a fact-track digital payment method for facilitating
real-time and instant payment transactions between multiple bank accounts. Users can transfer funds using a UPI
virtual payment address or by scanning a QR code with UPI applications. UPI allows for the free transfer of
funds, and it has earned the title of the simplest and most convenient payment platform.
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Literature Review
With advances in information technology, India’s banking sector is undergoing a digital shift. UPI is a leading
development, supporting fast, secure digital payments. Research, including studies by Mahesh et al. (2021),
Kakade et al. (2017), and Gochhwal (2017), has recognized UPI’s potential as a superior payment platform
within the retail industry. Early challenges such as server issues were identified, but the platform’s benefits in
terms of security, accessibility, and adaptability were highlighted. Tung (2018) noted that demonetization
spurred India’s move toward a cashless economy, making UPI an essential payment tool. These studies
provide foundational insights into UPI’s architecture, growth, and influence on digital payments. This case
study expands upon existing research by exploring UPI’s growth rate and market share and detailing its phased
development and integration into India’s financial system.
Statement of the Problem
As digital technology transforms banking, financial institutions face the challenge of adopting innovative,
customer-friendly solutions. Digital payments have made banking more transparent, accessible, and
instantaneous, replacing traditional Case Study-based methods. India’s shift toward a cashless society has led
to the emergence of digital payment platforms, with UPI positioned as a convenient and advanced payment
option. Given its cost-effective nature and broad adoption, UPI is a model for real-time payments, inspiring
interest internationally. This study examines UPI’s role in India’s digital payment ecosystem, tracing its
development, key features, and application usage to better understand its popularity and growth patterns. The
study’s findings will support the Indian banking sector’s efforts to enhance digital payments, improve
customer experience, and expand application usage.
Objectives
This study, "Digital Banking: India’s Unified Payment Interface for Digital Development," aims to:
- Examine UPI and its fundamental framework
- Review UPI’s phased development and feature enhancements
- Analyze various UPI applications and their market shares
- Measure UPI’s growth in transaction volume and value
- Impact of UPI
Unified Payment Interface (UPI): Development Stages
Developed by NPCI in 2016 and regulated by the RBI, UPI enables interbank fund transfers in real time. The
platform allows users to make P2P and P2M payments through virtual payment addresses or QR codes,
offering a simple, charge-free, digital payment experience.
UPI Applications
A wide range of applications operate on the UPI platform, each with unique features and a user-friendly
interface for digital transactions. Many banks now integrate UPI within their mobile applications to provide
seamless payment services to their customers experience through each UPI application.
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UPI APPS DETAILS
Leading online app for UPI services
Launched in 2015. Owned by Flipkart, and
1.PhonePe
it's a subsidiary of Walmart. It protects the
user's money with the best-in-class security
system
Services provided include digital payments,
mobile payments, and payment systems. It is
available in Il spoken languages. The users
can make payments such as utility bills,
charges, money transfers, credit card bills,
and even the insurance premium
Google Pay also known as Gpay, Developed
by Google, It is quite popular because of its
2. Gpay
simple way of operation and feature richness.
It allows users to earn scratch application
cards and other rewards after each
transaction. It works with all the banks that
support the BHIM UPI. It allows users to
make transactions for in-store and online
purchases by linking their credit or debit
cards.
3. Paytm Founded in 2010, Acronym-Pay through
mobiles. Promotes secure and fast digital
payments. More than 20 million merchants
and businesses have adopted Paytm for
accepting payments in digital mode. Services
offered: fund transfer, bill payments,
ticketing services, online gaming,retail
brokerage products. The main aim is to bring
at least half a billion people into the
mainstream of the economy through digital
payments
Launched by the SBI bank. The easiest and
most simple app It allows the account
4.SBI Pay
holders of almost all banks that are live
members of UPI to fund transfers, bill
payments, recharges, shopping, etc.
Provide the flexibility of making payments
at the user's convenience 24*7
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5 .BHIM (UPI) BHIM-Bharat Interface For Money,
Developer: NPCI (National Payments
Corporation Of India). Launched in 2016.
It is a UPI-enabled platform for facilitating
safe and secure payments using mobile
phones. Services: send and request
money, scan and pay, check transaction
history, view the static QR code and the
virtual payment addresses linked to the
account, switch between multiple
accounts.
Growth and Adoption of UPI in India:
Since its introduction in 2016, the Unified Payments Interface (UPI) has seen remarkable growth, with several
factors propelling its rapid acceptance:
- Ease of Use : UPI’s interface allows linking multiple bank accounts within a single app, making fund
transfers and payments seamless for users. This simplicity has helped it appeal to a broad range of
users.
- Interoperability : UPI’s ability to function across different banks and payment platforms has
eliminated barriers, encouraging widespread use.
- Real-Time Transactions : UPI’s real-time processing offers instant confirmations, a benefit for
consumers and merchants alike.
- Government Initiatives : Programs like Digital India and the 2016 demonetization have promoted
UPI as part of a push for a cashless society. Government incentives and awareness campaigns have
also played a role in its growth.
- Technological Upgrades : Continuous improvements, including features added in UPI 2.0, have
enhanced both functionality and user experience.
Today, UPI handles billions of transactions monthly, amounting to ₹14.89 lakh crore (around $181 billion),
showcasing its deep integration into daily financial transactions. This surge in digital payments has not only
improved transaction efficiency and transparency but also reduced reliance on cash, especially in urban areas
where digital payments are now standard.
Role of UPI in Financial Inclusion
UPI has played a significant role in promoting financial inclusion in India:
- Financial Access : UPI has opened up digital payments to individuals across various income levels,
benefiting those who previously had limited access to financial services.
- Small-Value Transactions : UPI enables small transactions, allowing individuals, including low-
income groups, to engage in the digital economy.
- Government Welfare : UPI’s integration with government welfare schemes ensures that subsidies
and benefits reach beneficiaries directly, reducing inefficiencies and improving distribution.
- Rural Reach : UPI has expanded financial access to rural areas, narrowing the urban-rural divide in
financial services.
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Impact of UPI on Digital Transactions
UPI’s influence on India’s digital transactions has been profound:
- Transaction Growth : Monthly transaction volumes have surged, with over 9.41 billion transactions
in May 2023.
- Market Influence : PhonePe and Google Pay have emerged as major players, with 46% and 33% of
the UPI market, respectively, as of 2022.
Analysis
UPI payment solution, which provides a user-friendly, mobile-centric, instant, and real-time payment facility
through various UPI applications, has marked a milestone in capturing market share. Digital payment
infrastructure in India and many payment modes have arisen as a means for making instant and real-time
payments. UUPI (Unified Payment Interface), developed by the National Payment Corporation of India, is one
of the most popular digital payment modes in India. The study examines the fundamentals of the UPI payment
system and includes the various UPI apps that are widely in use based on their features and market share. UPI
can be termed a revolutionary payment platform in the entire retail payment ecosystem. The UPI payment
solution, which provides a user-friendly, mobile-centric, instant, and real-time payment facility through various
UPI applications, has marked a milestone in capturing market share. From the analysis, it is clear that PhonePe
and Google Pay are the two major leaders that are dominating the UPI market as of 2022. As per the data (Fig.
l), PhonePe contributes 46% to the total UPI market share, followed by Google Pay with a 33% share, Paytm
with a 15% share, Amazon Pay with a 1% share, and other applications such as Whatsapp Pay and Mobikwik
with a share of 4.1%. ENT PLATFORM GROWTH AND STATUSToday, all the Indian banks are on the way
to the adoption of various technological innovations to their existing business models and are trying to adopt
growth-and customer-oriented plans instead of profit-oriented plans and strategies. The banking system in India
before 2016 followed a tradition of traditional fund transfers such as RTGS, NEFT, IMPS, etc. Due to the
complexity of the Case Study-based system and the rigid system of rules, there is a need for the emergence of
an automated and more standardized payment platform. Also, the Digital India initiative forces the banking sector
to follow a digitally covered ecosystem focusing on Case Studyless and cashless-enabled economies. Thus,
various digital payment modes have emerged in the banking sector landscape, and the unified payment interface
is one of them.
The growth of Unified Payments Interface (UPI) transactions over the five-year period from 2019 to 2024
demonstrates a significant shift in the digital payments landscape in India. UPI, which enables real-time bank-to-
bank transactions, has experienced remarkable growth in both transaction volume and value. In 2019, UPI crossed
the 1 billion monthly transaction mark, signifying the increasing acceptance of digital payments. This momentum
continued as the COVID-19 pandemic accelerated the transition to contactless transactions, leading to a monthly
volume of over 2 billion by the end of 2020. By 2024, UPI is expected to surpass 12 billion transactions monthly,
reflecting an overall increase of 1,100% in just five years. The ease of use, government push for digital
transactions, and the growth of smartphone penetration in India have all contributed to this unprecedented volume
growth. In terms of value, UPI has shown even more dramatic increases. In 2019, the annual transaction value
was between ₹18 to ₹21 lakh crore (approximately $240 billion), which ballooned to around ₹150 lakh crore ($2
trillion) by the end of 2023. This marks a staggering growth of 730-860% over the five-year period, with
projections for 2024 estimating transaction values exceeding ₹175 lakh crore. This rise is indicative of not just
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the number of transactions increasing but also the higher value of goods and services being transacted through
UPI, signaling broader adoption across various sectors, including retail, e-commerce, and even peer-to-peer
payments. The increase in transaction value underscores UPI’s role as a mainstream payment mechanism in
India's economy.
The annual transaction volume data offers further insights into UPI’s growth trajectory. In 2019, UPI recorded
around 12 billion annual transactions, but by 2024, this number is projected to reach 140 billion transactions—a
growth of over 1,050%. This expansion illustrates how UPI has shifted from being a niche payment option to a
ubiquitous tool for daily transactions across the country. The significant jump in both monthly and annual
transactions highlights UPI's role in bridging the gap between traditional banking services and the digital-first
economy. The rise in the number of users, along with the integration of UPI with various merchant platforms,
has amplified its usage considerably. One of the critical drivers of this growth is the increasing integration of UPI
into various economic sectors. UPI has extended its reach beyond individual person-to-person transfers and now
covers business-to-consumer and even government payments. The simplicity and efficiency of UPI have made it
a preferred method for small businesses, startups, and large corporations alike, which explains the sharp rise in
transaction values. Moreover, as more banks, fintech companies, and mobile payment apps incorporate UPI into
their platforms, the growth in both volume and value has been further amplified. The rising volume indicates that
not only are more people using UPI, but they are also using it more frequently for a wider range of transaction
types. The phenomenal growth in both the volume and value of UPI transactions between 2019 and 2024 reflects
its deep integration into India's financial ecosystem. A transaction volume growth of 1,100%, value growth of up
to 860%, and annual transaction growth of 1,050% demonstrate UPI’s transformative impact on digital payments
in India. The rapid adoption of UPI underscores the increasing digital literacy, the trust in secure payment
mechanisms, and the ease of real-time payments that have reshaped consumer behavior. By 2024, UPI is poised
to cement its role as the backbone of India’s digital payments infrastructure, driving economic inclusion and
financial innovation.
According to the NPCI report, the UPI platform has witnessed a rapid rise in recent years in both the volume and
value of transactions. Since its launch in 2016, the UPI transaction has witnessed a positive growth rate in both
volume and value. The data about the period of 2018 to 2022 is taken for analysis. As of December 2022, the
total volume had jumped to 7,829 million transactions worth 12,82,055 crores. The analysis of the volume and
value of UPI transactions shows a positive growth rate, which indicates that the UPI platform is growing at a
much faster rate. The UPI transactions achieved a higher growth rate during December 2018 in terms of both the
volume and value of transactions, which implies that the development taking place in the UPI technology in each
phase has marked an upward trend in the growth rate of the UPI payment platform year by year. UPI is considered
one of the most advanced and user-friendly payment methods. Users can send and receive money through this
platform very instantly. When compared to other payment methods in the digital ecosystem, the position that the
UPI platform holds is a remarkable achievement. The usage statistics of UPI transactions in the total financial
transactions for the last 9 years are shown in Table 2 below.
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Table 2: UPI Transactions in Value & Volume in India's Retail Digital Payment
Year Total UPI Transactions in Value (in UPI transaction (Volume in
Crores) Mn)
2024 15788817.25 108369.26
2023 18284406.82 117675.97
2022 12595077.87 74044.48
2021 7159285.8 38744.55
2020 3387744.72 18880.89
2019 1836638.18 10787.54
2018 585710.45 15571.2
2017 57020.87 429.15
2016 893.07 2.65
Source: NPC-2024
The table summarizes UPI transaction growth in India from 2016 to projected 2024 figures, detailing value (in
crores) and volume (in millions). This timeline reflects a significant evolution in India’s digital payment
landscape, with UPI emerging as a key platform for real-time transactions.
Early Stages (2016-2017)
UPI debuted in 2016, initially recording 2.65 million transactions worth ₹893.07 crores. By 2017, with growing
awareness, transactions rose to 429.15 million, worth ₹57,020.87 crores. Though modest, these early numbers
laid the groundwork for rapid adoption.
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Growth Phase (2018-2019)
UPI usage gained traction in 2018 and 2019. By 2018, transactions reached 15,571.2 million, worth ₹5,85,710.45
crores. In 2019, volumes further increased to 10,787.54 million transactions, valued at ₹18,36,638.18 crores,
driven by convenience for a variety of transactions, from peer-to-peer payments to retail purchases.
Pandemic Surge (2020-2021)
The COVID-19 pandemic in 2020 significantly accelerated digital payments. UPI transactions nearly doubled
from 2019, reaching 18,880.89 million, and values grew to ₹33,87,744.72 crores. By 2021, volumes rose to
38,744.55 million with values at ₹71,59,285.8 crores, as businesses and users embraced contactless payments.
Maturity and Widespread Use (2022-2023)
By 2022, UPI achieved maturity with extensive growth in transaction volume and value. In 2022, volumes
reached 74,044.48 million transactions worth ₹1,25,95,077.87 crores, expanding into e-commerce, small
businesses, and personal payments. By 2023, volumes grew to 1,17,675.97 million, with transaction value soaring
to ₹1,82,84,406.82 crores, demonstrating UPI’s wide reach in India.
2024 Projections
Forecasts for 2024 suggest continued growth, with volumes projected at 1,08,369.26 million transactions and
values at ₹1,57,88,817.25 crores. This indicates UPI’s role as essential infrastructure for government, retail, and
B2B transactions in India, reflecting its evolution from a peer-to-peer tool to a comprehensive financial service.
Key Observations
1. Exponential Growth
UPI transactions have grown exponentially from 2016’s 2.65 million to a forecasted 108 billion in 2024, with
values rising from ₹893.07 crores to ₹1,57,88,817.25 crores, underscoring its extensive adoption across sectors.
2. Pandemic Impact
The 2020 COVID-19 pandemic accelerated UPI’s adoption, doubling transactions and increasing values as
people moved to digital payments.
3. Established Maturity (2021-2023)
UPI reached maturity by 2022, with broad-based acceptance across various sectors, solidifying its role in India’s
payment system.
4. Future Growth in 2024
Although volume growth may slow in 2024, transaction value is set to stay high, signifying UPI’s role in
significant financial transactions and its expansion in B2B and government payments.
5. Financial Inclusion and Innovation
UPI’s success is attributed to government support, high mobile penetration, and an accessible user interface,
fostering financial inclusion and innovation through features enhancing user experience.
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6. Market Leaders
PhonePe and Google Pay lead the market, reflecting the rising trend in UPI transactions and their substantial role
within the financial ecosystem. UPI’s transaction share in India’s overall digital payments has steadily grown,
capturing a large market segment.
To maximize UPI’s potential, it is essential to develop merchant-oriented solutions and attract a wider user base.
Incentives and innovative features could encourage further adoption. A push for digital payment literacy and
accessibility across all demographics will help embed UPI in daily life, fostering economic growth.
Suggestions for Enhancing UPI
1. Security
Advanced security features like multi-factor authentication, real-time fraud detection, encryption, and regular
audits can protect users and maintain trust.
2. Regulatory Support
Simplifying compliance, fostering a supportive environment, engaging stakeholders, and using regulatory
sandboxes will balance innovation and user protection.
3. Technological Investments
Upgrading UPI’s scalability, improving user interface, integrating emerging tech like AI and blockchain, ensuring
reliability, and conducting public outreach will bolster UPI’s usability and trust.
4. Public Awareness
Awareness campaigns targeting rural populations and the elderly can help increase familiarity with UPI.
Partnerships with financial institutions and success stories can further boost user confidence.
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Conclusion
The study focuses on an overview of the UPI, its development, status, and growth in India. The results show that
there is high growth in the usage of UPI transactions, and UPI has become a superior digital payment platform
over the existing payment methods. With the advancement and development of the UPI in each phase, users and
beneficiaries can obtain a secure and convenient mode of payment with attractive and unique features. UPI has
become one of the most successful technology-driven innovations in the banking landscape, and it enables India
to become a successful leader in the list of countries making real-time payment markets. The banking sector is
on its way to a tech-driven landscape by adopting various technological innovations and payment modes, such as
UPI, which helps the banks achieve a milestone transformation in the payment infrastructure of the Indian
banking sector. It is essential to point out that the UPI has become one of the most advanced new-age payment
systems in the world, and it acts as a momentum force or an enabler to promote financial inclusion in the economy
and also bring the customer base into the digital and cashless economies. UPI has promoted financial inclusion
by empowering underserved and unbanked populations. Its integration with government welfare schemes has
ensured direct benefit transfers, reducing leakages and enhancing efficiency. This has had a transformative impact
on the lives of millions. Despite its successes, UPI faces challenges like cybersecurity threats and regulatory
hurdles. Addressing these challenges is crucial for its long-term effectiveness. Enhancing security measures,
streamlining regulations, investing in technology, and conducting awareness campaigns are essential steps to
bolster UPI's resilience and user trust. UPI has revolutionized digital payments and financial inclusion in India.
Its continued evolution and adaptation to emerging challenges will be key to maintaining its pivotal role in India’s
financial ecosystem, driving further innovation and inclusivity in the digital economy.
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