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Consolidated progress chart of all payment instruments

Quarterly insights

Note: The total includes Onus and Offus transactions, excluding uncategorized transactions.

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Quarterly insights

Aadhaar-enabled Payment System (AePS)

AePS usage remained broadly stable, with cash withdrawals continuing to dominate

    • AePS processed approximately 92.82 million cash-withdrawal transactions worth INR 244.11 billion (USD 2.58 billion) in June 2026. In June 2025, it processed approximately 94.46 million transactions worth INR 256.46 billion (USD 2.71 billion). These figures represent a decline of approximately 1.7% in volume and 4.8% in value. Despite these declines, AePS usage remained broadly stable. The channel remains important for assisted cash withdrawals, particularly for customers who depend on business correspondents (BCs) and Aadhaar authentication.
    • New assisted cash-out methods are adding to this pressure. NPCI launched UPI Cash Point in October 2025. The service allows smartphone users to withdraw cash at BC outlets through a UPI QR code. In August 2026, Spice Money launched its UPI Cash Withdrawal service across approximately 1.6 million BC outlets. Customers can use major UPI applications, including Bharat Interface for Money (BHIM), PhonePe, Google Pay, and Paytm, to transfer funds to an agent and receive cash. The service permits withdrawals of up to INR 5,000 (USD 53) per transaction and INR 10,000 (USD 106) per day.
    • The two channels are likely to coexist rather than substitute for each other. UPI Cash Point requires no biometric device and suits smartphone users and customers affected by fingerprint failures. It may therefore absorb some AePS demand and contribute to its gradual decline. AePS will remain essential for customers without smartphones, active UPI personal identification numbers (PINs), or reliable connectivity. This includes many recipients of direct benefit transfers. BCs are therefore likely to offer both services. This approach can broaden their customer base and increase commission income, while also increasing the importance of liquidity management and transaction verification controls.

    • Unique Identification Authority of India (UIDAI) expanded face authentication infrastructure for Aadhaar-enabled services

    • In September 2026, UIDAI launched a new Aadhaar Face Authentication Software Development Kit and testing sandbox. The facility allows banks, FinTech companies, and other financial institutions to integrate Aadhaar-based face authentication directly into their applications. Customers no longer need to use the separate FaceRD application.
    • The new system includes AI-based liveness detection, anti-spoofing controls, encryption, and facilities to test network failures, invalid signatures, and attempted impersonation. UIDAI reported that Aadhaar face authentication had processed more than 5 billion transactions. Nearly 200 entities had adopted the technology for Aadhaar-enabled payments and other financial and government services.
    • Face authentication could eventually reduce AePS’s dependence on fingerprint scanners and improve access for senior citizens, manual workers, and customers whose fingerprints are difficult to authenticate. However, the September 2026 announcement concerns Aadhaar authentication infrastructure rather than a nationwide launch of face-authenticated AePS cash withdrawals. Its effect on AePS will therefore depend on subsequent implementation by NPCI, acquiring banks, and BC networks.

    • The RBI introduced stronger transaction monitoring and fraud controls for AePS

    • In June 2025, the RBI issued directions for the onboarding and monitoring of AePS touchpoint operators. The directions took effect on 1st January 2026. Acquiring banks must now conduct Know Your Customer (KYC)-based due diligence before onboarding operators. They must also re-verify the KYC of operators who remain inactive for three months and continuously monitor operator activity through their transaction-monitoring Banks must establish operational parameters based on factors such as location, operator type, transaction volume, and transaction velocity.
    • The directions also require banks to review these parameters periodically to account for emerging fraud patterns. They must also implement system-level controls to ensure that application programming interfaces (APIs) and other technological integrations support only authorized AePS operations.
    • These measures address reported AePS fraud that involves identity theft and compromised customer credentials. They seek to protect customers and maintain confidence in Aadhaar-enabled transactions.
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    Quarterly insights

    Prepaid Payment Instruments (PPIs)

    PPI transaction volumes increased, while their overall transaction value remained stable

    • According to the RBI’s December 2025 Payment System Report, PPI transaction volume increased from 6.2 billion transactions in 2021 to 9.18 billion in 2025. However, the annual transaction value remained broadly unchanged at approximately INR 2,650 billion (USD 28.05 billion).
    • The number of outstanding PPIs increased from 1.51 billion in December 2021 to 2.09 billion in December 2025. This included an increase in wallets from 1.25 billion to 1.62 billion and in prepaid cards from 260 million to 470 million.
    • The combination of higher transaction volumes and largely unchanged transaction value indicates that PPIs are increasingly used for small-value payments. However, the rapid expansion of UPI and bank account-based payments continues to limit growth in the average value of PPI transactions.

    • The RBI proposed a new regulatory framework for PPI users

    • In April 2026, the RBI released the draft Reserve Bank of India (Prepaid Payment Instruments) Directions, 2026. The proposed directions would replace the 2021 framework and consolidate subsequent amendments into a single set of rules. The draft would cover PPI authorization, issuance, operation, and closure. As of September 2026, the directions remain in draft form.
    • The draft retains the existing capital requirements for non-bank PPI issuers. Issuers must maintain a minimum positive net worth of INR 50 million (USD 0.53 million) when they apply for RBI authorization. They must reach INR 150 million (USD 1.59 million) by the end of the third financial year. The draft also proposes stricter escrow-fund segregation and audit requirements. These obligations help protect customer funds. However, they can increase the cost and complexity of obtaining and maintaining a PPI authorization, particularly for smaller FinTech companies.
    • The proposed framework also strengthens customer protection and operational controls. It requires immediate refunds for failed or canceled transactions. Issuers would mark PPIs with no transactions for one year as inactive and could close them after another year without reactivation. Issuers would also need to provide clearer, multilingual disclosures and formal grievance-resolution arrangements. The draft also supports wider use through greater wallet visibility on third-party UPI applications and wider access to UPI-linked PPIs for foreign visitors.

    • The RBI enabled full-KYC PPI holders to use third-party UPI applications

    • In December 2024, the RBI permitted holders of full-KYC PPIs to make and receive UPI payments through third-party applications. Previously, PPI holders could access UPI services only through their PPI issuer’s mobile application.
    • Under the revised framework, PPI issuers can make their full KYC wallets discoverable on third-party UPI applications. Customers can link these wallets to a UPI handle and use them through applications other than the wallet issuer’s own platform.
    Transactions conducted through the PPI issuer’s application use the customer’s existing wallet credentials for authentication. Transactions initiated through a third-party UPI application use UPI credentials for authentication. This arrangement improves interoperability and expands payment options available for PPI users.

    • Note : P2P and P2M bifurcation unavailable till March '20. We can assume
    that majority of the total transactions were P2P in nature.

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    Quarterly insights

    Unified Payments Interface (UPI)

    UPI has become the world’s largest real-time payment platform, by transaction volume 10 years after its launch

    • UPI completed 10 years of operations in August 2026. In FY 2017-18, it processed approximately 915 million transactions worth INR 1,098 billion (USD 11.47 billion). During the same period, cards processed around 4.75 billion transactions worth INR 9,191 billion (USD 95.90 billion). UPI was still a nascent payment channel, with cards processing about five times as many transactions and eight times as much value. In 2019, UPI accounted for only about 34% of India’s digital payment volume. Person-to-merchant (P2M) payments now account for 63% of UPI’s transaction volume.
    • UPI’s growth over the past decade has been rapid. Annual transaction volume rose from approximately 18 million in FY 2016-17 to 241.6 billion in FY 2025-26, an increase of more than 13,000 times. Transaction value rose more than 4,000 times during the same period, reaching INR 314,000 billion, or approximately USD 3.3 trillion. UPI now processes more than 660 million transactions a day and accounts for nearly half of all real-time payment transactions worldwide. It represented 85.5% of India’s digital payment volume in the second half of 2025. Merchant payments now account for nearly two-thirds of UPI transactions, which shows how the platform has expanded beyond person-to-person (P2P) transfers into everyday retail payments.

    • Parliament ended UPI’s statutory zero-merchant discount rate (MDR) regime and paved the way for merchant charges

    • In August 2026, Parliament passed the Taxation and Other Laws (Amendment) Bill, 2026, which amends Section 10A of the Payment and Settlement Systems Act, 2007. The government has prohibited MDR on account-to-account UPI transactions and RuPay debit card payments since January 2020. Under this new provision, the government can now specify which electronic payment modes remain free of charge. The Finance Ministry said consumers, P2P transfers, and small merchants will not face charges. Any MDR would apply only to large merchant payments above a threshold, at rates well below those on cards.
    • The change could allow banks, payment aggregators, and third-party UPI applications to earn MDR revenue from account-based UPI payments for the first time since 2020 and reduce the platform’s dependence on government incentives and subsidies. The panel has yet to determine the MDR charges through an official notification. The final charges will determine whether large merchants absorb the cost or pass it on to consumers.
    • The market’s response to the proposed 30% market-share cap will be important to monitor. The cap is scheduled to take effect in December 2026. Major third-party application providers (TPAPs), such as PhonePe and Google Pay, already exceed this limit individually and together account for more than 75% of the UPI market. Both regulatory changes could significantly affect TPAPs’ revenue structure.

    • The National Payments Corporation of India (NPCI) is building a protocol that would let artificial intelligence (AI) agents make UPI payments on users’ behalf

    • NPCI is developing a Unified Agent Protocol that would allow AI agents to initiate and complete low-value UPI payments based on user instructions. The protocol would remove the need for separate approval for each transaction. Initial use cases may include frequent purchases, such as groceries, while future applications could allow agents to purchase products during sales or execute transactions when user-defined conditions are met.
    • The proposed framework would use UPI Circle for delegated payment authority and Reserve Pay to block funds for future debits. Users would be able to establish rules and spending limits for AI agents. The system would include identity verification, audit trails, and a liability framework. If implemented effectively, this could position UPI among the first national payment infrastructures to support agent-led commerce at scale.
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    Quarterly insights

    BHIM Aadhaar Pay (BAP)

    BAP recorded a sharp increase in transactions in 2026

    • According to the RBI’s Payment System Indicators, BAP processed approximately 3.23 million transactions worth INR 10.79 billion (USD 114.2 million) in June 2026. This figure exceeded the 1.83 million transactions worth INR 6.15 billion (USD 65.1 million) recorded in June 2025.
    • During FY 2025-26, BAP processed approximately 23.2 million transactions worth INR 77.39 billion (USD 819 million). The growth indicates that the service continues to give an important payment option to customers who may not use smartphones, payment cards, or conventional UPI applications.

    • NPCI strengthened merchant acquisition and monitoring requirements for BAP

    • In May 2024, NPCI issued reference guidelines for merchant acquisition under BAP. The guidelines make member banks responsible for merchant acquisition, management, and oversight. This responsibility also covers merchants that aggregators or other partners onboard.
    • Banks must implement board-approved merchant-acquisition policies and conduct appropriate underwriting, due diligence, transaction monitoring, portfolio reviews, and merchant training. They must also monitor third parties involved in merchant acquisition to identify and mitigate operational and fraud-related risks.
    • Acquiring banks must assign merchant category codes that correspond with the merchant’s actual business activities. They must also ensure that merchants do not use BAP for cash withdrawals, as the service is intended solely for payments against legitimate purchases of goods and services.

    • BAP remains a specialized payment channel despite its recent growth

    • BAP requires customers to have an Aadhaar-linked bank account and complete biometric authentication through a certified scanner at the merchant location. This lets customers pay without a card or smartphone, but reliance on biometric devices and internet connectivity can limit adoption.
    • In comparison, UPI processed approximately 23.66 billion transactions worth INR 29,878.80 billion (USD 316.25 billion) in June 2026, whereas BAP processed 3.23 million transactions worth INR 10.79 billion (USD 114.2 million). This considerable difference indicates that BAP remains a niche payment instrument.
    • UPI QR payments offer customers and merchants a faster process without the need for external biometric equipment. However, BAP remains relevant for assisted and Aadhaar-based payments, particularly among customers who lack smartphones, payment cards, or confidence in using mobile payment applications independently.
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    Quarterly insights

    Cash

    Cash in circulation continued to increase despite the rapid expansion of digital payments

    • The volume of banknotes in circulation increased by 10.5%, from approximately 15.51 billion notes in March 2025 to 17.13 billion notes in March 2026.
    • The value of banknotes in circulation increased by 11.9%, from approximately INR 36,868 billion (USD 390.18 billion) to INR 41,240 billion (USD 436.45 billion) during the same period. The INR 500 (USD 5.29) denomination represented 85.5% of the total value and 41.2% of the total volume of banknotes in circulation.
    • The RBI’s survey of individuals and small retailers also indicated a continued strong preference for cash. Digital payments and cash continue to grow simultaneously. Cash remains important for everyday transactions, particularly among small merchants and customers with limited access to digital infrastructure.

    • The withdrawal of INR 2,000 (USD 21.17) banknotes was nearly complete by March 2026

    • The RBI reported that 98.45% of the INR 2,000 (USD 21.17) banknotes, valued at INR 3,560 billion (USD 37.68 billion) and in circulation when the withdrawal was announced, had returned to the banking system by 31st March 2026.
    • Approximately INR 55 billion (USD 0.58 billion) in INR 2,000 (USD 21.17) banknotes consequently remained in circulation. These banknotes remain legal tender, although the RBI has stopped printing the denomination and is no longer routinely putting it into circulation.
    • Individuals can continue to exchange or deposit these banknotes at any of the RBI’s 19 issue offices. They can also send the notes through India Post to an RBI issue office for credit to an eligible bank account in India.

    • The RBI mandated wider availability of lower-denomination banknotes through ATMs

    • In April 2025, the RBI directed banks and white-label ATM operators to ensure that their ATMs regularly dispense INR 100 (USD 1.06) or INR 200 (USD 2.12) banknotes from at least one cassette.
    • The RBI required at least 75% of ATMs to meet this requirement by 30th September 2025. The coverage target increased to 90% of ATMs by 31st March 2026.
    • This measure seeks to improve public access to lower-denomination banknotes, facilitate everyday cash transactions, and reduce customers’ dependence on INR 500 (USD 5.29) banknotes for relatively small purchases.
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    Quarterly insights

    National Electronic Funds Transfer (NEFT)

    NEFT transactions continued to grow despite the rapid expansion of UPI

    • According to the RBI’s Payment System Indicators for June 2026, NEFT processed approximately 858.23 million transactions worth INR 44,536.77 billion (USD 467.7 billion) in June 2026. In comparison, the system processed 792.05 million transactions worth INR 37,647.42 billion (USD 395.3 billion) in June 2025.
    • Between June 2025 and June 2026, NEFT transaction volume increased by approximately 8.4%, while transaction value rose by 18.3%. During FY 2025-26, NEFT processed approximately 10.10 billion transactions worth INR 502,265.05 billion (USD 5,274.1 billion). These figures indicate NEFT’s continued importance despite UPI’s dominance in retail payment volumes.
    • The average NEFT transaction value stood at approximately INR 51,890 (USD 545) in June 2026, compared with approximately INR 1,273 (USD 13.4) for UPI. This substantial difference indicates that NEFT remains important for relatively high-value payments, such as B2B transactions, institutional payments, and large account-to-account fund transfers.

    • The RBI introduced beneficiary-name verification for NEFT transactions

    • The RBI directed banks to introduce a beneficiary account-name lookup facility for NEFT and Real Time Gross Settlement (RTGS) transactions. All direct and sub-member banks had to make the facility available to customers by 1st April 2025.
    • Under this facility, a customer can enter the beneficiary’s account number and Indian Financial System Code (IFSC) before they initiate a transaction. The system retrieves the beneficiary’s registered account name from the receiving bank, which enables the sender to verify the details before they confirm the payment.
    • The facility is available through internet banking, mobile banking, and bank branches without any additional charge. It allows customers to confirm the intended recipient’s name before they transfer funds through NEFT. This helps reduce incorrect transfers and fraud.

    • NEFT maintained extensive institutional reach and round-the-clock availability

    • The RBI reported that the NEFT network had 234 direct members with 183,122 IFSC-enabled branches as of August 2026. This extensive membership enables smaller banks, cooperative banks, and other eligible institutions to access the system through direct participating banks.
    • NEFT operates throughout the year in 48 half-hourly settlement batches each day. Its round-the-clock availability, absence of an RBI-prescribed maximum transaction limit, and ability to process both retail and institutional payments make it suitable for a wide range of customer and business requirements.
    • In June 2026, NEFT processed approximately 858.23 million transactions worth INR 44,536.77 billion (USD 467.7 billion). In June 2025, it processed 792.05 million transactions worth INR 37,647.42 billion (USD 395.3 billion). This represents year-on-year growth of approximately 8.4% in volume and 18.3% in value. NEFT’s high transaction value and broad institutional participation indicate its continued importance to India’s payment infrastructure, despite greater use of faster retail payment platforms.
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    Quarterly insights

    *99# (USSD-based mobile banking service)

    USSD usage declined significantly despite a temporary increase in transaction volume

    • An analysis of NPCI data indicates that the USSD-based *99# transaction volume briefly increased to approximately 0.49 million in May 2025 up from 0.16 million in May 2024. However, transaction value declined to approximately INR 0.07 billion (USD 0.74 million). This indicates that customers primarily used the service for low-value transactions.
    • The number of banks live on *99# increased to 119 in May 2024 but declined substantially to 29 by May 2025. This suggests that banks reduced their focus on USSD as customers increasingly adopted application-based UPI and other feature-phone payment channels.
    • The recent increase in transaction volume does not represent a sustained revival of USSD. Its low transaction value and reduced bank participation indicate that *99# now serves a niche group of customers without smartphones or reliable mobile-data connectivity.

    • UPI 123PAY is now a prominent feature-phone alternative to USSD

    • In October 2024, the RBI increased the per-transaction limit for UPI 123PAY from INR 5,000 (USD 53) to INR 10,000 (USD 106). The facility enables feature-phone users to make UPI payments and is available in 12 languages.
    • UPI 123PAY supports interactive voice response calls, missed-call payments, feature-phone applications, and proximity sound-based payments. These options provide feature-phone users with more flexible payment methods than the menu-driven *99# service.

  • The RBI’s Payment System Report, December 2025, identifies UPI 123PAY and voice-enabled Hello! UPI as innovations that expand UPI accessibility. Their continued development indicates that feature-phone payment adoption increasingly favors voice-based UPI solutions over conventional USSD transactions.
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    National Automated Clearing House (NACH)

    NACH debit transactions expanded rapidly, but mandate rejections increased

    • NPCI data analyses show that NACH Debit transaction volume increased from approximately 993 million in FY 2021-22 to 1.97 billion in FY 2024-25. Transaction value more than doubled from INR 9,500 billion (USD 100.6 billion) to INR 21,900 billion (USD 231.8 billion). This growth reflects the increased use of e-mandates for loan installments, systematic investment plans, insurance premiums, and subscriptions.
    • The expansion continued during FY 2025-26. NACH Debit processed approximately 1.60 billion transactions worth INR 19,600 billion (USD 207.5 billion) between April and December 2025. Average daily volume increased from approximately 3 million transactions in January 2022 to 6 million in December 2025. Average daily value also increased from INR 29.26 billion (USD 310 million) to INR 78.02 billion (USD 826 million).
    • However, the proportion of mandates rejected through the Mandate Management System increased from 28% in FY 2017-18 to 55% in FY 2025-26, as of November 2025. Rejections can result from insufficient balances, incorrect customer or account information, and mandate-processing issues. For customers, unsuccessful mandates can lead to missed repayments, penalties, or interrupted services, while lenders and service providers may face higher collection costs and less predictable cash flows.

    • NPCI upgraded the National Automated Clearing House platform to NACH 3.0

    • NPCI announced the upgrade of the NACH platform to NACH 3.0 through a circular issued in June 2025. The upgraded platform was introduced in July 2025 to improve the process of bulk and recurring transactions, such as salaries, pensions, equated monthly installments, systematic investment plans, and utility payments.
    • NACH 3.0 introduced an improved user interface, simplified navigation, optimized file processing, advanced dashboards, and real-time system monitoring. These improvements help banks and institutions process large transaction volumes more efficiently and identify operational issues more quickly.
    • The upgraded platform also strengthened data protection through encrypted data transfers and enhanced security controls. It introduced additional self-service capabilities but retained the transaction and settlement file formats already in use. This approach reduced implementation challenges for participating institutions.

    • RBI introduced a consolidated framework for recurring digital-payment mandates

    • In April 2026, the RBI introduced the Digital Payments-E-mandate Framework, 2026. The framework consolidates requirements for recurring digital payments, which include mandates used for NACH-based collections. Under the framework, recurring transactions of up to INR 15,000 (USD 159) can generally be processed without an additional factor of authentication (AFA) for each subsequent debit after the establishment of the mandate.
    • A higher limit of INR 100,000 (USD 1,058) applies to recurring payments for mutual fund subscriptions, insurance premiums, and credit-card bills. Transactions above the applicable limits require AFA. This requirement balances the convenience of automated payments with safeguards for higher-value transactions.
    • The framework requires issuers to notify customers before a debit and provide an accessible facility to modify the mandate’s validity or cancel it at any time. These requirements strengthen customer control over recurring payments, particularly as NACH mandate volumes rise and rejection rates remain elevated.
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    e-RUPI - Prepaid e-voucher

    e-RUPI voucher issuance increased sharply, but redemption remained limited

    • According to NPCI data, e-RUPI issuance rose sharply in early 2025, led by public-sector banks. The Indian Bank generated 507,550 vouchers in February 2025, and the State Bank of India generated 126,810, up from 110,625 and 106,084, respectively, in January. Government programs can issue vouchers worth up to INR 100,000 (USD 1,058), while private entities can issue vouchers worth up to INR 10,000 (USD 106).
    • Despite the sharp rise in issuance, redemption remained limited. In February 2025, the Indian Bank redeemed only 8.4% of the cumulative vouchers it had issued, compared with 6.5% for the State Bank of India. This suggests that merchant acceptance and beneficiary activation, rather than issuance, constrain e-RUPI adoption. Use cases with a defined redemption network, such as fair-price shops under the proposed Public Distribution System (PDS) pilot, may therefore have greater potential to scale.

    • The Bank of Baroda expanded e-RUPI to enable P2P digital gifting

    • In September 2025, the Bank of Baroda launched an e-RUPI P2P digital gifting facility through its bob इ Pay application. The bank described it as an industry-first solution that allows individuals to purchase and send digital vouchers directly to others.
    • The facility extends e-RUPI beyond government and corporate benefit distribution into individual gifting. It creates potential use cases for purpose-specific gifts across education, healthcare, food, travel, and other goods and services.

    • The government proposed e-RUPI vouchers for public food distribution

    • In January 2026, the Union Ministry of Consumer Affairs, Food and Public Distribution proposed pilots to integrate NPCI’s e-RUPI platform with the PDS. The pilots involved the State Bank of India as the issuer bank and the National Informatics Centre as the technology partner. The vouchers represented beneficiaries’ food entitlements under the National Food Security Act and were redeemable only for specified quantities of commodities, such as rice or wheat.
    • Under the proposed process, beneficiaries received Aadhaar-linked and non-transferable e-RUPI vouchers through short message service (SMS) or the Mera Ration application. They redeemed the vouchers at fair-price shops after biometric or one-time password (OTP) authentication. The government expected the system to improve real-time monitoring and reconciliation, give beneficiaries greater control over their entitlements, and reduce leakages, diversion, under-weighting, and manipulation by intermediaries.
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    Credit card

    Credit card usage increased sharply, while debit card payments declined

    • According to the RBI’s Payment System Report, June 2026, credit cards processed approximately 6.02 billion payment transactions worth INR 23,624.71 billion (USD 250.08 billion) in FY 2025-26. In June 2026 alone, credit cards processed approximately 581.26 million transactions worth INR 2,013.62 billion (USD 21.32 billion), compared with 458.71 million transactions worth INR 1,830.88 billion (USD 19.38 billion) in June 2025. This represents year-on-year growth of approximately 26.7% in volume and 10% in value.
    • India had approximately 1.15 billion outstanding payment cards as of June 2026. This total comprised 121.59 million credit cards and 1.03 billion debit cards. The number of credit cards increased by approximately 9.6% from 110.97 million in June 2025. In June 2026, online transactions accounted for approximately 50.9% of credit-card payment volume and 63.1% of transaction value. These figures highlight the increased use of credit cards for higher-value e-commerce and other online purchases. Debit cards remained more widely held, but consumers continued to use them predominantly for cash withdrawals and basic account access services.

    • The RBI mandated customer choice among multiple credit card networks

    • In March 2024, the RBI issued its final directions on arrangements between credit card issuers and card networks. Credit card issuers must offer eligible customers a choice of multiple authorized card networks when they issue a new credit card. Existing customers may exercise this choice when they renew their cards.
    • The directions prohibit card issuers from entering into agreements that restrict their use of competing card networks. The measure seeks to reduce restrictive arrangements and promote competition among authorized networks, which include American Express, Diners Club, Mastercard, RuPay, and Visa.
    • The customer-choice requirement became effective in September 2024, six months after the RBI issued the circular. However, it does not apply to issuers with 1 million or fewer active credit cards or issuers that operate cards through their own authorized card network.

    • The RBI introduced stronger authentication requirements for card payments

    • The RBI issued the Reserve Bank of India (Authentication Mechanisms for Digital Payment Transactions) Directions, 2025, which took effect on 1st April 2026. The directions require at least two distinct authentication factors for domestic digital payments, which include most online card transactions, unless a specific exemption applies.
    • For transactions other than card-present payments, at least one authentication factor must be dynamically generated or verified and unique to the transaction. Issuers may offer authentication methods such as one-time passwords, PINs, software tokens, device-based credentials, fingerprints, or other biometric mechanisms.
    • Card issuers may introduce additional checks based on transaction location, customer behavior, device characteristics, and historical transaction patterns. They must also establish authentication and risk-based validation mechanisms for applicable non-recurring, cross-border card-not-present transactions by 1st October 2026.
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    Debit card

    Debit card payments declined as customers shifted toward UPI

    • According to the RBI’s Payment System Report for June 2026, debit cards recorded approximately 97.09 million payment transactions worth INR 352.99 billion (USD 3.74 billion). This was lower than the 108.57 million transactions worth INR 354.63 billion (USD 3.75 billion) recorded in June 2025. This represents a year-on-year decline of approximately 10.6% in volume and 0.5% in value.
    • During FY 2025-26, debit cards processed approximately 1.28 billion payment transactions worth INR 4,454.75 billion (USD 47.15 billion). Transaction volume declined more sharply than transaction value. This suggests that customers increasingly use UPI for frequent, low-value retail payments. The average debit-card payment value increased from approximately INR 3,266 (USD 34.6) in June 2025 to INR 3,636 (USD 38.5) in June 2026.
    • Debit card ownership nevertheless continued to expand, from approximately 1.01 billion cards in June 2025 to 1.03 billion in June 2026. Debit cards also remained important for access to cash. In June 2026, customers made approximately 398.43 million debit card automated teller machine (ATM) withdrawals worth INR 2,163.59 billion (USD 22.90 billion). ATM withdrawals, therefore, exceeded debit card payment transactions by more than four times in volume and six times in value during the month. These figures highlight the card’s continued importance as an instrument for account access and cash withdrawal.

    • The RBI revised charges for debit card transactions conducted at ATMs

    • From 1st May 2025, banks could charge customers a maximum of INR 23 (USD 0.24) for each ATM transaction beyond the prescribed number of free transactions. The previous maximum customer charge was INR 21 (USD 0.22).
    • Customers continue to receive a prescribed number of free financial and non-financial ATM transactions each month. The number depends on the ATM’s location and whether customers use their own bank’s ATM or another bank’s ATM. Banks and service providers cannot count transactions that fail due to technical problems, unavailable cash, or other issues attributable to them toward the free limit or charge customers for these transactions.
    • For failed ATM cash withdrawals, banks must reverse the debited amount within five calendar days. If the bank delays the reversal, it must automatically compensate the customer INR 100 (USD 1.06) for each additional day.

    • New authentication rules expanded security options for online debit card payments

    • In September 2025, the RBI issued the Reserve Bank of India (Authentication Mechanisms for Digital Payment Transactions) Directions, 2025. The directions became effective on 1st April 2026 and apply to digital payments, which include online debit card transactions. They generally require two distinct authentication factors, at least one of which must be dynamically generated or uniquely associated with the transaction.
    • The framework is technology-neutral and allows card issuers to use authentication methods, such as biometrics, device-based tokens, and passphrases, in addition to SMS-based one-time passwords. Issuers can also apply risk-based checks based on transaction value, customer behavior, device, location, and previous transaction patterns.
    • Financial institutions began implementing biometric card authentication in 2026. For example, Axis Bank, PayU, and Flipkart introduced fingerprint- and facial recognition-based authentication for eligible card payments in April 2026. The system uses device binding and issuer-level verification. This reduces reliance on SMS-based OTPs and strengthens protection against interception and SIM-swap fraud.
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    Immediate Payment Service (IMPS)

    IMPS recorded fewer transactions but a higher transaction value in the latest period

    • According to the RBI’s payment system indicators, IMPS processed 364.34 million transactions valued at INR 7,117.04 billion (USD 75.34 billion) in July 2026. In July 2025, it processed 482.19 million transactions valued at INR 6,314.11 billion (USD 66.84 billion). Transaction volume therefore declined by about 24.4%, while transaction value increased by about 12.7%.
    • The average value of an IMPS transaction consequently increased from approximately INR 13,095 (USD 139) to INR 19,535 (USD 207). This shift indicates a preference for fewer, higher-value transfers and reinforces IMPS as a preferred channel for medium- and high-value instant payments.
    • The long-term trend remains positive. The RBI’s Payment System Report states that IMPS volume increased from 4.34 billion transactions in 2021 to 5.18 billion in 2025. During the same period, transaction value nearly doubled from INR 38,000 billion (USD 402.24 billion) to INR 75,000 billion (USD 793.90 billion).

    • NPCI enabled bulk payments through IMPS for instant one-to-many disbursements

    • The NPCI issued a circular in March 2026 to enable bulk payments through IMPS. Implementation began on 5th May 2026. The facility allows banks and other participating entities to initiate multiple real-time payments to beneficiaries through a single debit instruction.
    • Each bulk payment receives a parent transaction ID and a retrieval reference number. Each beneficiary payment receives a separate child transaction ID and reference number. This structure improves transaction traceability, reconciliation, auditability, and dispute resolution for individual beneficiaries.
    • The existing IMPS limit of INR 500,000 (USD 5,293) continues to apply separately to each beneficiary payment. Banks and other participating entities process, settle, charge, and handle disputes for each child transaction independently. This approach reduces the risk that one failed payment affects the entire batch.

    • The RBI strengthened authentication requirements for IMPS and other digital payments

    • The RBI issued the Authentication Mechanisms for Digital Payment Transactions Directions, 2025, which took effect on 1st April 2026. The directions apply to domestic digital payments, which include IMPS. They require at least two distinct authentication factors, unless specifically exempted.
    • At least one authentication factor must have a unique link to the transaction and pass dynamic generation or validation. Banks may offer options such as passwords, PINs, one-time passwords, software tokens, device-based credentials, fingerprints, or other biometric mechanisms.
    • Banks can also introduce additional checks based on factors such as transaction location, customer behavior, device characteristics, and previous transaction patterns. These measures strengthen IMPS security, support newer authentication technologies, and help banks respond more effectively to potentially fraudulent transactions.
    • Source

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    Quarterly insights

    Bharat Bill Payment System (BBPS)

    Bharat Connect has recorded significant growth through 2025

    • The transaction volume of Bharat Connect, formerly known as BBPS, increased from 560 million transactions in 2021 to 3.05 billion transactions in 2025. The transaction value increased 16-fold from INR 960 billion (USD 10.2 billion) to INR 14,800 billion (USD 156.7 billion) during the same period. The number of billers on the platform reached approximately 22,600 by December 2025.
    • Bharat Connect’s growth accelerated in 2025, when transaction volume rose by approximately 40% and value by approximately 93%. The surge was driven largely by a Reserve Bank of India (RBI) requirement, effective July 2024. It requires third-party applications to route credit-card bill payments through Bharat Connect. As 2025 was the first full year of this mandate, the shift of high-value card repayments to the platform lifted the average transaction value from approximately INR 3,540 (USD 37) in 2024 to INR 4,850 (USD 51).

    • WhatsApp has integrated Bharat Connect for in-app bill payments

    • WhatsApp introduced an in-app bill-payment facility in India powered by Bharat Connect. The facility lets users retrieve, manage, and pay bills directly through WhatsApp without switching to a separate banking or payment app. It covers 22,722 billers across 30 categories, including electricity, water, cooking gas, insurance, credit-card bills, loan repayments, and FASTag recharges.
    • Users can manage multiple accounts under the same biller, review previous and upcoming bills, and access frequently used billers from WhatsApp’s Payments screen. Users can pay through UPI, debit cards, or credit cards. WhatsApp has more than 500 million users in India. This reach can help Bharat Connect expand through lower app-switching friction and wider access to digital bill payments for segments that have not adopted dedicated payment applications, such as first-time digital users in smaller towns.

    • NPCI Bharat BillPay Limited (NBBL) is poised to expand Bharat Connect beyond consumer bill payments to support business-to-business (B2B), net-banking, and foreign exchange (forex) payments

    • Bharat Connect for business extends the platform’s interoperable payment infrastructure to B2B transactions. It enables companies to digitize invoice presentment, collections, payment confirmation, and reconciliation across distributors, stockists, and retailers. Axis Bank became the first bank to implement the solution for a Fortune 500 company. The B2B launch extends Bharat Connect’s interoperable infrastructure to business payments and collections, including invoice management and reconciliation. It gives businesses a shared route for these processes, which may reduce their reliance on separate arrangements with each payment partner. An interoperable payment rail can reduce collection costs and create digital payment trails that support working capital credit for small retailers.
    • NBBL launched Banking Connect as an interoperable and standardized net- and mobile-banking framework. Developed with ecosystem partners, such as Juspay and Razorpay, it connects banks and payment aggregators through a common integration, supports app-based intent and quick response (QR) payment journeys, and standardizes settlements, refunds, and reconciliation. Banking Connect can reduce drop-offs in net banking, which remains the principal account-based channel for online payments above UPI limits. It also strengthens account-to-account alternatives to cards for high-value online purchases.
    • NBBL also introduced a forex category by linking Bharat Connect with Clearcorp’s FX-Retail platform. The service lets individuals view market-linked exchange rates and buy foreign currency through participating banking and payment apps. The service could reduce the wide spreads that banks and money changers typically charge for currency purchases, forex card loads, and outward remittances. Transactions processed through the service exceeded INR 100 million (approximately USD 1.1 million) between April and July 2026. This indicates early but still modest uptake of the digital forex facility.
    • Source

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    Quarterly insights

    Cheque Truncation System (CTS)

    CTS transaction volumes declined, while the average cheque value increased

    • According to the RBI’s December 2025 Payment System Report, CTS transaction volume declined from 720 million cheques in 2021 to 572 million in 2025. However, transaction value increased from INR 66,030 billion (USD 698.95 billion) to INR 70,820 billion (USD 749.66 billion) during the same period.
    • The average value of a CTS transaction consequently increased from approximately INR 92,000 (USD 974) in 2021 to INR 124,000 (USD 1,313) in 2025. This indicates that customers increasingly use cheques for relatively high-value payments, such as business transactions, property-related payments, settlements, and large purchases.
    • More than 600 million cheques valued at approximately INR 70,000 billion (USD 740.98 billion) are cleared through CTS annually. Despite the increased use of instant digital payment systems, cheques remain relevant for high-value transactions that require formal documentation and an established payment trail.

    • RBI introduced continuous clearing and settlement under CTS

    • The RBI announced the transition of CTS from batch processing to continuous clearing and settlement on realization. The first phase became operational on 4th October 2025, while the second phase commenced on 3rd January 2026.
    • Under the revised process, banks scan and submit cheques continuously between 10:00 a.m. and 4:00 p.m. The clearing house forwards cheque images to the paying banks throughout the day, while settlements take place every hour from 11:00 a.m. until the confirmation session ends.
    • From 3rd January 2026, paying banks must positively or negatively confirm cheques within three clear hours of receipt. The system treats unconfirmed cheques as approved and includes them in the next settlement, subject to applicable safeguards.

    • The revised CTS process shortens clearing timelines and strengthens customer safeguards

    • Under the new system, presenting banks must credit customers within one hour after successful settlement. The continuous process, therefore, reduces cheque-clearance time from as long as two working days to a few hours and improves access to funds for individuals and businesses.
    • The RBI’s updated guidance continues to require banks to offer the Positive Pay System (PPS) for cheques valued at INR 50,000 (USD 529) and above. Customers submit the cheque date, beneficiary name, and amount electronically. The bank compares these details with the cheque presented through CTS to detect discrepancies or possible alteration.
    • Customers may use Positive Pay voluntarily, although banks can make it mandatory for cheques valued at INR 500,000 (USD 5,293) and above. The RBI also clarified that CTS does not accept alterations to essential cheque details. Customers must issue a fresh cheque if they need to change the beneficiary name or payment amount.

    • Compare the progress of different payments instruments

    • AePS

    • PPIs

    • UPI

    • Credit Card

    • Debit Card

    • IMPS

    • BBPS

    • CTS

    • BAP

    • Cash

    • NEFT

    • *99#

    • NACH

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    Value Volume
    Total Transaction Value(in USD Mn) Total Transaction Volume(in Mn)

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    Value Volume
    Total Transaction Value(in USD Mn) Total Transaction Volume(in Mn)

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    Source Source-2

    Value Volume
    Total Transaction Value(in USD Mn) Total Transaction Volume(in Mn)

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    Resources

    Digital payments in India—democratizing financial services for the masses

    See more

    Digital payments in India—unlocking an opportunity worth USD 10 trillion

    See more

    Conversational Payments on UPI: Unlocking new frontiers for next-generation payments

    See more

    Building an ecosystem of collections through BBPS

    See more

    How can digital public infrastructure improve government-to-person payments?

    See more

    The evolution of payments in India—looking ahead

    See more

    How do we envision digital payments beyond 2022?

    See more

    Retail digital payments in India: A massive opportunity worth at least INR 45 billion (USD 608 million)

    See more

    How digital payments drive financial inclusion in India

    See more

    Key data sources

    National Payments Corporation of India | Reserve Bank of India | Bharat Bill Pay | Telecom Regulatory Authority of India | Pradhan Mantri Jan-Dhan Yojana

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