The long-term success of UPI and RuPay cards depends on building a balanced ecosystem that supports all stakeholders and shares infrastructure costs to expand adoption and ensure inclusive, sustainable growth in digital payments, according to a study backed by the Department of Financial Services.
The study recommends introducing tiered cashback programmes for RuPay transactions in Tier 2–6 cities, enabling contactless RuPay cards and improving international acceptance through global partnerships.
It also calls for promoting small-ticket payments through tools such as UPI Lite in everyday settings including public transport, quick-service restaurants and local retail. Incentives should encourage frequent routine transactions rather than only high-value usage.
A key finding is that policymakers should avoid a one-size-fits-all incentive design. With UPI adoption already strong and RuPay usage lagging, differentiated incentive strategies are needed to ensure balanced ecosystem growth. The scheme previously provided payouts to acquiring banks, shared with issuers, payment service providers and third-party app providers, helping expand QR codes, POS terminals and participating banks. Continued incentive support, the report indicates, remains essential for sustaining expansion, particularly in underserved regions.
The Incentive Scheme for Promotion of RuPay Debit Card and low-value BHIM-UPI person-to-merchant transactions was introduced in FY 2021–22 and continued through FY 2024–25 to accelerate universal adoption of digital payments, reduce cash dependence and formalise routine economic activity. It offered structured budgetary support to acquiring banks and ecosystem participants so that digital payments remained affordable and accessible for citizens and merchants.
Digital payments now dominate daily transaction behaviour, with 65% of UPI users reporting multiple transactions per day. Adoption is especially high among those aged 18–25 at 66%, indicating a strong shift toward digital-first habits. The study found 90% of users reported increased confidence in digital payments after using UPI and RuPay cards. Furthermore, 52% cited cashback incentives as a key adoption driver and 74% pointed to speed as the main advantage.
Merchant adoption is also widespread: 94% of small merchants accept UPI, and 72% express satisfaction due to faster transactions and improved record-keeping. About 57% reported increased sales after going digital.
Government budgetary support totalling Rs 8,276 crore has underpinned the scheme, including disbursements of Rs 1,389 crore in FY22, Rs 2,210 crore in FY23, Rs 3,631 crore in FY24 and Rs 1,046 crore in FY25. This supported banks, payment operators and app providers in scaling low-value digital transactions nationwide.