From Cash to Clicks: UPI’s Role in Shaping Digital Payments in India

Abstract

Abstract
India's financial environment has undergone a significant transformation, moving away from a cash-centric approach toward a digitally oriented economy. Introduced in 2016 by the NPCI, the UPI has played a pivotal role in this evolution by facilitating instant, secure, and seamless bank-to-bank transfers through mobile platforms. As of May 2025, UPI facilitates over 14.5 billion monthly transactions valued above ₹20 lakh crore, accounting for more than 75% of all retail digital payments in India. This paper explores UPI’s growth, functionality, and its expanding role in India’s payment ecosystem through an analysis of trends from FY 2017–18 to FY 2023–24. Data shows exponential growth in UPI adoption, with a marked transition from Person-to-Person (P2P) to Person-to-Merchant (P2M) transactions, indicating rising commercial integration. Supported by innovations like UPI Autopay, UPI Lite, and credit card linkage, by enabling widespread access to seamless digital transactions, UPI has become instrumental in advancing financial inclusion and reinforcing the foundation of India’s digital economy. While it faces challenges such as cybersecurity risks, server constraints, and digital illiteracy, its overall impact is undeniable. Drawing on RBI and NPCI data, this study highlights UPI’s role in transforming India into a
global fintech leader. The findings underscore UPI’s importance in driving inclusive, scalable, and future-ready digital payment systems in both domestic and international contexts.