India’s fee panorama has undergone a profound transformation over the previous years, marked by government-led infrastructure modernization, the rise of digital funds, and the speedy enlargement of the fintech sector.
A brand new report by PwC and International Fintech Fest offers an summary of India’s evolving funds panorama, emphasizing the simultaneous rise of digital funds, particularly the Unified Funds Interface (UPI), and the persistent use of money.
It additionally appears to be like on the emergence of the ecosystem-based enterprise fashions, and identifies areas of future progress, together with bank cards, synthetic intelligence (AI) purposes, and new UPI use instances, all of the whereas warning of the brand new dangers accompanying these tendencies.
Money in circulation continues to develop
Regardless of speedy progress of digital funds, money stays broadly used and continues to develop. In 2025, money in circulation totaled INR 37.2 trillion (US$420 billion) in worth and 292 billion in quantity. These figures mark a 19% year-over-year (YoY) enhance in worth, and a 5% YoY enhance in quantity, extending an upward pattern noticed over the previous decade.
Sure segments, together with micro retailers, rural shoppers, and older generations, are main this pattern, with states like Uttar Pradesh, New Delhi, and Bihar seeing significantly excessive utilization.
Money additionally stays standard throughout the formal financial system, the place digital funds are extra frequent, largely as a consequence of greater ranges of belief. Retailers, particularly, favor the fee technique to keep away from prices related to digital funds, together with service provider low cost price (MDR), and machine rental charges.
The MDR payment, collected by the service provider financial institution and shared with the financial institution that issued the cardboard, the fee community, and the point-of-sale (POS) supplier, sometimes ranges between 1% to three% of the transaction quantity.
Moreover, money stays a most popular fee mode in sure sectors like jewellery, the place over 60% of transactions are in money, regardless of rules requiring purchases above INR 200,000 (US$2,259) to cite the customer’s everlasting account quantity (PAN).
As India’s fee panorama continues to evolve, the report predicts that whereas money might “now not be the only ‘king’”, its utility will persist alongside rising digital strategies like UPI. A balanced coexistence is anticipated, with money persevering with to serve particular transactional wants like financial savings, whereas digital funds rise in prominence owing to its comfort and effectivity.
A necessity for investments in AI in funds and fraud prevention
UPI transactions have elevated significantly over the previous years. Up to now yr alone, these transactions have seen a 42% enhance in quantity and 30% enhance in transaction worth.
UPI now leads retail funds, accounting for 85% of all digital transactions in India. Its ecosystem spans almost 700 banks and serves 491 million people and 65 million retailers, making it one of many world’s largest real-time fee methods when it comes to quantity.
With improvements corresponding to biometric authentication, Web-of-Issues (IoT) enabled funds and cross-border remittances, UPI is nicely on observe to clock 1 billion transactions per day by 2028, totaling 118.8 billion transactions that yr and an estimated INR 342.6 trillion (US$3.9 trillion) in annual worth, the report says.
The expansion of UPI, coupled with growing digital fee adoption and rising penetration of bank cards, has made the sector enticing to buyers. In line with the report, AI-driven funds and fraud prevention are poised to develop into the subsequent main progress drivers, propelling India’s fee {industry} into its subsequent section in an more and more mature and aggressive market.
The fee vertical has been persistently among the many prime three recipients of fintech funding in India since a minimum of 2021, except 2023 and 2024. In H1 2025, it led deal exercise, accounting for about 35% of funding, or US$520 million, in accordance to knowledge from KPMG.
Cost emerges as a strategic instrument
As soon as dominated by banks and know-how companies, India’s fee sector is now attracting gamers from numerous fields, together with retail, telecommunications, fintech, and e-commerce. Cost capabilities are more and more seen as a strategic instrument to draw new clients, income enlargement, and buyer retention.
Telcos are launching fee companies and cellular wallets, leveraging their huge subscriber bases and distribution networks to convey monetary companies to underserved populations. E-commerce platforms are constructing in-app fee methods, providing digital wallets, purchase now, pay later (BNPL) preparations, and co-branded bank cards to simplify checkout and foster loyalty. Lastly, social and messaging apps are integrating peer-to-peer (P2P) and service provider UPI funds instantly inside their platforms, leveraging their excessive person engagement to show communication channels into monetary channels.
This cross-industry participation is accelerating monetary inclusion, increasing service provider acceptance, and driving digital adoption in smaller cities. It’s making a extra dynamic, user-centric and interconnected funds ecosystem in India, the place the boundaries between commerce, communication and finance are more and more blurred, spurring innovation and enhancing accessibility.
Nonetheless, heightened competitors can also be placing strain on {industry} gamers. Over the long run, pure-play fee gamers might want to differentiate themselves by way of progressive merchandise, add helpful options, enlargement into underserved buyer segments, and accomplice with others to achieve extra clients, the report says.
Credit score companies, UPI use instances, AI amongst prime progress areas
As a part of the report, PwC surveyed greater than 170 people within the Indian funds and fintech house. It revealed that {industry} stakeholders consider that the subsequent wave of fee transformation in India can be spearheaded by bank cards, with 65% of respondents rating them as the highest progress mode. The affect of AI is one other dominant theme, as 73% of respondents count on generative AI and agentic AI to considerably impression the funds panorama.
UPI can even stay central to the Indian fee panorama, with new use instances rising. 22% of individuals recognized cross-border transactions as a pivotal new use case. That is supported by a good regulatory surroundings, the place 70% of respondents consider that tokenization and the RuPay-UPI linkage are prime enablers.
In 2022, the Nationwide Funds Company of India (NPCI) together with Reserve Financial institution of India (RBI) launched UPI funds through bank cards on RuPay, India’s card fee community, increasing acceptance to hundreds of thousands of retailers at low value.
Credit score-based companies are additionally seen as main alternatives for UPI, with 17% of respondents citing micro-credit and purchase now, pay later (BNPL) on on the spot fee rail as a key pivotal use case. These companies would permit shoppers underserved by the normal banking sector to make purchases, and handle money circulate extra flexibly. For retailers, they’d open new income streams and allow low-cost, high-volume credit score distribution by way of a trusted, broadly used platform.
Rising fraud dangers
The rise in digital funds in India has been accompanied by a rise in fraud. Fraudulent transactions reached 2.4 million in 2025, marking a 20% enhance from 2 million in 2024.
A number of initiatives have been launched to deal with this subject. RBI has mandated that monetary establishments providing real-time gross settlement (RTGS) and nationwide digital funds switch (NEFT) companies undertake a beneficiary account identify verification system by April 01, 2025.
In parallel, RBI is getting ready the launch of the Digital Funds Intelligence Platform (DPIP), a system which leverages AI to flag dangerous transactions and improve real-time fraud danger administration. The platform analyzes knowledge from a number of sources to subject pre-transaction alerts, serving to banks and clients resolve whether or not to proceed.
Lastly, RBI’s MuleHunter.ai is an AI and machine studying (ML) powered instrument designed to determine mule accounts extra successfully. The instrument makes use of 19 distinct behavioral patterns related to mule accounts to identify suspicious actions in actual time.
Featured picture: Edited by Fintech Information Singapore, primarily based on picture by freepik and surajbhujel through Freepik
