The Unified Payments Interface (UPI) has solidified its dominance in India’s digital payment landscape, capturing an estimated 84% share of total digital transactions in the fiscal year 2025. This massive adoption has placed India at the forefront of the global real-time payments revolution. Despite marginal fluctuations in monthly transaction volumes, the daily average and annual growth rates remain robust, underscoring the platform’s vital role in the economy.
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Speaking on the ecosystem’s success and future challenges at the Global Fintech Fest, Shri Nagaraju Maddirala, Secretary of the Department of Financial Services in the Ministry of Finance, confirmed the country’s unparalleled performance:
“In the digital payment ecosystem, India has taken a big leap in it. Yes, India already has more than 50% of the total UPI transactions, digital transactions are conducted in India itself. And one challenge we have, while UPI growth has been very substantial even now, is bringing entire communities living in tribal and rural areas into a formal financial system. That is our challenge.
In many places, we also have a challenge of internet. Therefore, offline transactions and rural transactions are a challenge. If you notice, a large number of FinTechs actually are innovating and connecting the rural communities and also offline products. Once we do that, I think the entire country will be on the formal financial system and will be able to do digital payments.”
The Secretary’s remarks highlight a critical strategic focus for the next phase of digital finance: achieving deep, universal inclusion. While UPI has successfully captured the urban and semi-urban markets, the challenge now lies in extending the formal financial system to tribal and rural communities, often hindered by limited internet connectivity.
The Ministry is actively encouraging FinTech innovators to develop solutions for offline and rural transactions to overcome this digital divide. Success in this endeavor is expected to bring the entire country into the formal financial fold, driving equitable economic growth.
Shri Maddirala also took the opportunity to definitively address recurring media speculation regarding the imposition of Merchant Discount Rate (MDR) charges on UPI transactions:
“We keep hearing reports every two weeks that MDR charges may be reviewed. So, is there any proposal on table with government where MDR charges may be reviewed? Because you can only clear this confusion once and for all as to what will happen on the MDR going ahead.
The Government has said we are not imposing MDR charges. The Government has issued a statement, and only the media has been writing. So, we are not concerned if the media keep writing one paper after the other. But the government is very clear. We have also clarified through press statements. The government is not imposing it.”
This clear statement by the Ministry of Finance puts an end to persistent market speculation, confirming the government’s unwavering commitment to keeping UPI transactions free for the public.
This policy decision is fundamental to UPI’s phenomenal growth, as the zero-MDR policy maintains the cost-effectiveness and accessibility that are central to its success and continued high adoption rate. By clarifying its stance, the government reassures consumers and businesses that the digital payment ecosystem will remain supportive of mass usage.
