What is the story about?
India’s digital payments ecosystem crossed a decisive inflection point in 2025, moving from rapid adoption to deeply embedded consumer behaviour. Industry leaders say the year marked a shift from experimentation to habit, with payments becoming faster, smaller, more frequent and credit-linked.
Unified Payments Interface (UPI) remained the backbone of this transition.
Bharat Soni, Co-Founder of Ram Fincorp, notes that speed, mobile accessibility and convenience cemented UPI’s role as the preferred option for daily transactions, significantly reducing cash usage across urban and semi-urban India.
This behavioural shift was not limited to metros.
Sunil Yadav, Chief Information Officer at Satin Creditcare Network, says digital payments expanded rapidly across rural and semi-urban regions in 2025, driven by wider QR adoption, better connectivity and the growing use of UPI for utility payments and loan repayments among NBFC-MFI customers.
Small-ticket payments dominate, frequency rises
Experts consistently point to the surge in small-ticket payments as the defining trend of 2025.
According to Priyanka Kanwar, CEO and Co-Founder of Falcon, UPI crossed over 1,400 crore monthly transactions during the year, with nearly three-fourths of transactions below ₹500.
She adds that these high-frequency, low-value payments turned UPI from a convenience tool into a behavioural rail.
Raj P Narayanam, Founder and Executive Chairman of Zaggle, echoes this view, noting that consumers moved from “digital as convenience” to “digital as default.”
He says UPI Lite and Autopay played a key role in enabling frictionless, everyday payments, while merchant acceptance deepened across tier III and IV markets.
ALSO READ | UPI volumes jump 34% as India crosses 709 million QR codes in Q3: Worldline India
Cards and wallets find new roles
While UPI dominated volumes, cards continued to anchor higher-value and EMI-linked purchases.
Bharat Soni highlights that card payments remained stable in 2025, especially for structured credit use cases, supported by tokenisation and enhanced security frameworks.
Importantly, cards found new life through UPI integration.
Kanwar points out that RuPay credit cards accounted for a significant share of credit card transactions routed via UPI, allowing cards to penetrate smaller towns without additional merchant infrastructure.
Digital wallets, meanwhile, evolved rather than declined.
Soni and Narayanam both observe that wallets functioned as embedded features within super apps, mobility platforms and hyperlocal commerce ecosystems, supporting loyalty, offers and quick checkouts instead of acting as standalone payment instruments.
Growth Drivers: Use cases, regulation and merchants
Industry participants broadly agree that three forces powered growth in 2025: new use cases, regulatory clarity and merchant expansion.
Soni highlights the rise of UPI Autopay for SIPs, insurance premiums and loan repayments as a major driver of recurring digital payments.
Narayanam adds that embedded payments across delivery, subscription and mobility platforms helped turn one-time transactions into habit-forming behaviour.
From a banking perspective, Anubrata Biswas, MD and CEO of Airtel Payments Bank, says India’s Digital Public Infrastructure — UPI, Aadhaar and AePS — was central to scaling adoption. He notes that recurring and autopay transactions gained momentum across bills and subscriptions, while merchant acceptance expanded rapidly, especially among small online businesses.
Yadav adds that interoperable QR codes at kirana stores and local markets played a crucial role in normalising digital payments at the point of daily consumption, particularly for low-income households.
Security concerns reshape consumer behaviour
As volumes surged, fraud risks became more visible.
Biswas says 2025 saw a behavioural shift toward safety-first usage, with consumers opting for a “second account” dedicated to everyday digital payments to limit exposure to fraud.
Soni and Yadav also flag rising awareness around transaction transparency, digital receipts and audit trails, which helped reduce friction for customers while improving trust for lenders and merchants.
Regulatory support reinforced this focus. Industry leaders point to the Reserve Bank of India’s push for stronger authentication and risk-based checks as critical to sustaining confidence without slowing transaction speed.
2026 Outlook: Deeper integration, smarter infrastructure
Looking ahead, experts expect 2026 to move the ecosystem from payment ubiquity to credit ubiquity.
Kanwar sees significant opportunity in scaling credit-on-UPI and card-on-UPI frameworks, which could bring formal credit access to millions outside traditional banking rails. Narayanam adds that interoperable credit, embedded payments in enterprise workflows and expansion into B2B and government use cases will define the next growth phase.
Biswas says the focus will shift from adoption to trust, security and personalisation, with AI playing a larger role in fraud prevention, credit assessment and customer experience.
However, challenges remain. Soni cautions that rising volumes will put pressure on infrastructure resilience and merchant economics, while Yadav highlights digital literacy, fraud awareness and customer protection as ongoing concerns in rural markets.
What consumers and small businesses can expect
For consumers, digital payments are likely to remain low-cost, fast and increasingly secure. Soni points to
biometric authentication, tokenised cards and AI-led fraud detection as key upgrades that will improve safety without adding friction.
Small businesses and micro-entrepreneurs stand to benefit from faster settlements, improved cash-flow visibility and easier access to formal financial products. Yadav notes that digital tools will help merchants strengthen bookkeeping and unlock quicker access to credit, while Narayanam highlights integrated payment-and-credit solutions as a major convenience gain.
Prakash Ravindran, CEO and Director of InstiFI, sums up the transition by noting that digital payments are evolving into a gateway or opportunity — enabling smarter credit journeys, interoperable infrastructure and more inclusive economic growth.
As India enters 2026, the consensus across industry leaders is clear: digital payments are no longer just about scale. With trust, intelligence and inclusion taking centre stage, the next phase will determine how deeply digital finance reshapes everyday commerce and access to credit across the country.
ALSO READ | IMF recognises UPI as world’s largest real-time payments system: Ministry of Finance
Unified Payments Interface (UPI) remained the backbone of this transition.
Bharat Soni, Co-Founder of Ram Fincorp, notes that speed, mobile accessibility and convenience cemented UPI’s role as the preferred option for daily transactions, significantly reducing cash usage across urban and semi-urban India.
This behavioural shift was not limited to metros.
Sunil Yadav, Chief Information Officer at Satin Creditcare Network, says digital payments expanded rapidly across rural and semi-urban regions in 2025, driven by wider QR adoption, better connectivity and the growing use of UPI for utility payments and loan repayments among NBFC-MFI customers.
Small-ticket payments dominate, frequency rises
Experts consistently point to the surge in small-ticket payments as the defining trend of 2025.
According to Priyanka Kanwar, CEO and Co-Founder of Falcon, UPI crossed over 1,400 crore monthly transactions during the year, with nearly three-fourths of transactions below ₹500.
She adds that these high-frequency, low-value payments turned UPI from a convenience tool into a behavioural rail.
Raj P Narayanam, Founder and Executive Chairman of Zaggle, echoes this view, noting that consumers moved from “digital as convenience” to “digital as default.”
He says UPI Lite and Autopay played a key role in enabling frictionless, everyday payments, while merchant acceptance deepened across tier III and IV markets.
ALSO READ | UPI volumes jump 34% as India crosses 709 million QR codes in Q3: Worldline India
Cards and wallets find new roles
While UPI dominated volumes, cards continued to anchor higher-value and EMI-linked purchases.
Bharat Soni highlights that card payments remained stable in 2025, especially for structured credit use cases, supported by tokenisation and enhanced security frameworks.
Importantly, cards found new life through UPI integration.
Kanwar points out that RuPay credit cards accounted for a significant share of credit card transactions routed via UPI, allowing cards to penetrate smaller towns without additional merchant infrastructure.
Digital wallets, meanwhile, evolved rather than declined.
Soni and Narayanam both observe that wallets functioned as embedded features within super apps, mobility platforms and hyperlocal commerce ecosystems, supporting loyalty, offers and quick checkouts instead of acting as standalone payment instruments.
Growth Drivers: Use cases, regulation and merchants
Industry participants broadly agree that three forces powered growth in 2025: new use cases, regulatory clarity and merchant expansion.
Soni highlights the rise of UPI Autopay for SIPs, insurance premiums and loan repayments as a major driver of recurring digital payments.
Narayanam adds that embedded payments across delivery, subscription and mobility platforms helped turn one-time transactions into habit-forming behaviour.
From a banking perspective, Anubrata Biswas, MD and CEO of Airtel Payments Bank, says India’s Digital Public Infrastructure — UPI, Aadhaar and AePS — was central to scaling adoption. He notes that recurring and autopay transactions gained momentum across bills and subscriptions, while merchant acceptance expanded rapidly, especially among small online businesses.
Yadav adds that interoperable QR codes at kirana stores and local markets played a crucial role in normalising digital payments at the point of daily consumption, particularly for low-income households.
Security concerns reshape consumer behaviour
As volumes surged, fraud risks became more visible.
Biswas says 2025 saw a behavioural shift toward safety-first usage, with consumers opting for a “second account” dedicated to everyday digital payments to limit exposure to fraud.
Soni and Yadav also flag rising awareness around transaction transparency, digital receipts and audit trails, which helped reduce friction for customers while improving trust for lenders and merchants.
Regulatory support reinforced this focus. Industry leaders point to the Reserve Bank of India’s push for stronger authentication and risk-based checks as critical to sustaining confidence without slowing transaction speed.
2026 Outlook: Deeper integration, smarter infrastructure
Looking ahead, experts expect 2026 to move the ecosystem from payment ubiquity to credit ubiquity.
Kanwar sees significant opportunity in scaling credit-on-UPI and card-on-UPI frameworks, which could bring formal credit access to millions outside traditional banking rails. Narayanam adds that interoperable credit, embedded payments in enterprise workflows and expansion into B2B and government use cases will define the next growth phase.
Biswas says the focus will shift from adoption to trust, security and personalisation, with AI playing a larger role in fraud prevention, credit assessment and customer experience.
However, challenges remain. Soni cautions that rising volumes will put pressure on infrastructure resilience and merchant economics, while Yadav highlights digital literacy, fraud awareness and customer protection as ongoing concerns in rural markets.
What consumers and small businesses can expect
For consumers, digital payments are likely to remain low-cost, fast and increasingly secure. Soni points to
Small businesses and micro-entrepreneurs stand to benefit from faster settlements, improved cash-flow visibility and easier access to formal financial products. Yadav notes that digital tools will help merchants strengthen bookkeeping and unlock quicker access to credit, while Narayanam highlights integrated payment-and-credit solutions as a major convenience gain.
Prakash Ravindran, CEO and Director of InstiFI, sums up the transition by noting that digital payments are evolving into a gateway or opportunity — enabling smarter credit journeys, interoperable infrastructure and more inclusive economic growth.
As India enters 2026, the consensus across industry leaders is clear: digital payments are no longer just about scale. With trust, intelligence and inclusion taking centre stage, the next phase will determine how deeply digital finance reshapes everyday commerce and access to credit across the country.
ALSO READ | IMF recognises UPI as world’s largest real-time payments system: Ministry of Finance
