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 gives 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 seems on the emergence of the ecosystem-based enterprise fashions, and identifies areas of future development, together with bank cards, synthetic intelligence (AI) functions, and new UPI use circumstances, all of the whereas warning of the brand new dangers accompanying these traits.
Money in circulation continues to develop
Regardless of speedy development 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) improve in worth, and a 5% YoY improve in quantity, extending an upward development noticed over the previous decade.
Sure segments, together with micro retailers, rural shoppers, and older generations, are main this development, with states like Uttar Pradesh, New Delhi, and Bihar seeing notably excessive utilization.
Money additionally stays well-liked inside the formal financial system, the place digital funds are extra frequent, largely on account of greater ranges of belief. Retailers, particularly, favor the fee methodology to keep away from prices related to digital funds, together with service provider low cost charge (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 client’s everlasting account quantity (PAN).
As India’s fee panorama continues to evolve, the report predicts that whereas money could “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 12 months alone, these transactions have seen a 42% improve in quantity and 30% improve 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 by way of quantity.
With improvements reminiscent of biometric authentication, Web-of-Issues (IoT) enabled funds and cross-border remittances, UPI is properly on monitor to clock 1 billion transactions per day by 2028, totaling 118.8 billion transactions that 12 months 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 traders. In keeping with the report, AI-driven funds and fraud prevention are poised to change into the following main development 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 no less than 2021, aside from 2023 and 2024. In H1 2025, it led deal exercise, accounting for about 35% of funding, or US$520 million, in accordance to information from KPMG.
Cost emerges as a strategic device
As soon as dominated by banks and expertise corporations, India’s fee sector is now attracting gamers from various fields, together with retail, telecommunications, fintech, and e-commerce. Cost capabilities are more and more seen as a strategic device to draw new prospects, income enlargement, and buyer retention.
Telcos are launching fee providers and cellular wallets, leveraging their huge subscriber bases and distribution networks to carry monetary providers 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 immediately 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 bettering accessibility.
Nevertheless, heightened competitors can also be placing strain on {industry} gamers. Over the long run, pure-play fee gamers might want to differentiate themselves by means of progressive merchandise, add helpful options, enlargement into underserved buyer segments, and companion with others to succeed in extra prospects, the report says.
Credit score providers, UPI use circumstances, AI amongst prime development 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 following wave of fee transformation in India shall be spearheaded by bank cards, with 65% of respondents rating them as the highest development mode. The affect of AI is one other dominant theme, as 73% of respondents count on generative AI and agentic AI to considerably affect the funds panorama.
UPI will even stay central to the Indian fee panorama, with new use circumstances rising. 22% of individuals recognized cross-border transactions as a pivotal new use case. That is supported by a positive 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 tens of millions of retailers at low price.
Credit score-based providers 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 providers would enable shoppers underserved by the normal banking sector to make purchases, and handle money stream extra flexibly. For retailers, they might open new income streams and allow low-cost, high-volume credit score distribution by means 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% improve from 2 million in 2024.
A number of initiatives have been launched to deal with this challenge. RBI has mandated that monetary establishments providing real-time gross settlement (RTGS) and nationwide digital funds switch (NEFT) providers undertake a beneficiary account identify verification system by April 01, 2025.
In parallel, RBI is making 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 information from a number of sources to challenge pre-transaction alerts, serving to banks and prospects resolve whether or not to proceed.
Lastly, RBI’s MuleHunter.ai is an AI and machine studying (ML) powered device designed to establish mule accounts extra successfully. The device 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