28 July 2025 | New Delhi
India’s digital payment ecosystem has experienced a massive boom over the past six financial years. From FY 2019-20 to FY 2024-25, the nation witnessed more than 65,000 crore digital transactions, amounting to over ₹12,000 lakh crore in value. This exponential growth highlights the transformational impact of digital finance on the Indian economy.
Government and RBI’s Joint Push Towards a Cashless Economy
The Government of India, in collaboration with the Reserve Bank of India (RBI), National Payments Corporation of India (NPCI), banks, fintech firms, and State Governments, has taken active steps to deepen the penetration of digital payments. Special attention has been given to tier-2 and tier-3 cities, ensuring even rural and remote areas have access to robust digital payment infrastructure.
In 2021, the Payments Infrastructure Development Fund (PIDF) was launched by the RBI to support this effort. As of May 31, 2025, nearly 4.77 crore digital touchpoints have been deployed under this scheme, especially in tier-3 to tier-6 cities, North-Eastern States, and Jammu & Kashmir.
To measure the pace and scale of digitization in the payment sector, RBI introduced the Digital Payments Index (RBI-DPI). With March 2018 as the base period (Index = 100), the index is released semi-annually. As per the latest report, the DPI reached 465.33 in September 2024, clearly showcasing significant progress in the adoption, performance, and infrastructure of digital payments across the country.
MSMEs and Small Merchants Benefiting from Digital Push
A number of targeted initiatives have been launched to support MSMEs and small businesses in adopting digital payment systems. These efforts aim to enhance operational efficiency and expand customer outreach. Key measures include:
- Incentive scheme to promote low-value BHIM-UPI transactions for small merchants.
- Introduction of Trade Receivables Discounting System (TReDS) to help MSMEs get invoices discounted at competitive rates.
- Rationalization of Merchant Discount Rate (MDR) on debit card transactions to make digital payments more affordable for small businesses.
These policy moves have significantly helped in mainstreaming digital payments in the informal and small enterprise sectors.
The rapid growth of digital payments has not only boosted convenience but has also brought unbanked and underbanked populations into the formal financial system. Digital platforms like Unified Payments Interface (UPI) have become powerful tools for enabling financial inclusion. They allow small vendors, street hawkers, and rural consumers to carry out seamless transactions without relying on cash.
Moreover, the digital footprints left behind through these transactions serve as alternative credit assessment tools. Financial institutions can now assess an individual’s creditworthiness based on digital transaction patterns even in the absence of traditional income or credit documents. This change has enabled greater access to formal credit, empowering citizens and bringing more economic actors under formal regulation.
By enabling fast, secure, and traceable financial transactions, the digital payment revolution has laid the foundation for a more inclusive and transparent economy. The synergy between government policies, regulatory frameworks, and technology platforms has positioned India as one of the global leaders in digital finance adoption.
The transformation is not just urban, it’s a pan-India movement, bringing financial tools and empowerment to the remotest parts of the country.
Source: This information was shared by Shri Pankaj Chaudhary, Minister of State in the Ministry of Finance, in a written reply in the Lok Sabha on July 28, 2025 | PIB
