Growth in digital payment adoption in India is moderating but steady. Data from the RBI’s Digital Payment Index (DPI) show that expansion has stabilised at around 11 per cent year-on-year since FY23, marking a shift from the sharp acceleration seen during the pandemic years to a more measured phase of growth.

The DPI, with March 2018 as the base, climbed to 516.76 by September 2025, more than five times its initial level. In contrast, growth rates surged to 73 per cent in 2019 and remained above 30-40 per cent throughout the pandemic. The subsequent slowdown, economists say, reflects a natural base effect rather than a loss of momentum.

“When you are starting from a low base, growth rates tend to look very high. As the base expands, growth becomes more normal,” said Madan Sabnavis, Chief Economist, Bank of Baroda. He added that even as digital transactions rise, “the amount of cash in the system has also been increasing at a normal rate,” making very high growth rates increasingly difficult to sustain. “From one billion transactions, you cannot suddenly double to two billion; it takes time,” he said, explaining the moderation to the 10-11 per cent range.

Beneath the headline numbers, however, the data reveal sharp shifts across payment channels. Mobile-based payments continue to drive transaction volumes. In December 2025, mobile payment volume rose nearly 27 per cent year-on-year, while internet-based payments declined by about 8 per cent and cash withdrawals at ATMs fell by almost 10 per cent.

“The one significant metric for digital payment adoption is user convenience, and the channel that offers maximum convenience will see higher transaction volumes, which, very unsurprisingly, are mobile phones,” said Vivek Iyer, Partner and Financial Services Risk Leader, Grant Thornton Bharat. He noted that UPI’s ease of use for low-value transactions has made mobile phones the default payment interface.

However, in value terms, internet-based payments are gaining ground. Transaction value via internet banking rose by more than 24 per cent year-on-year in December 2025, outpacing mobile payments, which grew nearly 17 per cent. This suggests that while everyday spending is moving to mobile apps, higher-value transactions continue to favour traditional online banking channels.

The underlying payment infrastructure is also evolving. The number of prepaid payment instruments (PPIs) expanded by over 57 per cent year-on-year, while ATM numbers continued to shrink. According to experts, the decline in ATMs reflects the growing preference for digital channels over cash, even as access widens.

Looking ahead, Sabnavis expects growth to remain steady rather than revert to earlier highs. “The growth will definitely increase as more people adopt digital sources, but it cannot go back to 20-30 per cent levels,” he said. Instead, the next phase is likely to be driven by broader adoption, incremental innovation and deeper penetration into cash-dependent regions.

Published on February 19, 2026