UPI has been the most significant contributor to the growth of digital payments in India. Its contribution to digital payments volume surged from 34% in CY-2019 to an impressive 83% in CY-2024, with a remarkable CAGR of 74% over five years.
In contrast, share of other payment systems like RTGS, NEFT, IMPS, credit cards, debit cards, etc. in digital payments volume declined from 66% to 17% during the same period, states the Payment Systems Report released by the RBI for half-year ended December 2024.
The adoption of UPI, and its subsequent growth, can be put into perspective with the help of Technology Acceptance Model (TAM), which identifies ‘perceived usefulness’ and ‘perceived ease of use’ to be the fundamental determinants of user acceptance. In other words, when the technology is beneficial and user-friendly, it surpasses adoption barriers, leading to its widespread adoption. That a fast payment system like UPI with features like instant transfer of funds (24/7), use of two factor of authentication, use of virtual payment address/mobile number/Quick Response (QR) codes, facilitation of P2P2 and P2M3 transactions, etc. will be immensely useful to the users was an easy conviction, but subsequent enhancements have further added to the usefulness and ease of use, which has resulted in UPI becoming single largest retail payment system in terms of volume of transactions in the country.
Both P2P and P2M transactions leverage UPI’s secure and real-time payment capabilities, making it easier for individuals and businesses to execute financial transactions without relying on traditional, time-consuming methods, states the report.
