Unified Payments Interface (UPI), India’s indigenous payment system, has emerged as a frontrunner in the realm of digital payments since its inception in 2016. The exponential growth in UPI transactions reflects its widespread adoption not only in urban areas but also in semi-urban and rural regions, gradually replacing conventional cash transactions. This shift is exemplified by the remarkable surge in UPI transactions, skyrocketing from a modest 1.8 crore in FY 2016-17 to an astounding 8,375 crore in FY 2022-23.
Recent data from fintech company PayNearby underscores the strong adoption of UPI across semi-urban and rural stores, with transactions growing by 118% in volume and 106% in value. This trend mirrors the overall surge in UPI volumes and transaction values, with November 2023 recording 11.24 billion transactions valued at Rs 17.4 trillion, according to the National Payments Corporation of India (NPCI).
In August 2023, UPI achieved a significant milestone of 10 billion transactions, marking a remarkable achievement in India’s digital payment landscape. However, despite this impressive growth, a rural-urban divide persists in the adoption of digital payments. Regional experiences during the Covid-19 pandemic underscore the crucial role of female banking correspondents in bridging this gap and unlocking India’s digital payments potential.
In rural India, cash remains deeply entrenched in daily transactions, especially in the agricultural sector, which forms the backbone of rural communities. Farmers heavily rely on physical currency for purchasing agricultural inputs, hiring labor, and making payments during harvest seasons. Moreover, cash transactions continue to dominate local markets due to the familiarity and simplicity associated with using physical currency.
The evolving landscape of digital payments in India, spearheaded by UPI, signifies a transformative shift towards a cashless economy. As UPI continues to penetrate deeper into rural and semi-urban areas, efforts to bridge the rural-urban gap and promote digital literacy will play a pivotal role in realizing India’s vision of a digitally empowered society.
