SYLLABUS

GS-3: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment. Science and Technology- developments and their applications and effects in everyday life.

Context: The Department of Financial Services released the report titled “Socio-Economic Impact Analysis of the Incentive Scheme for Promotion of RuPay Debit Card and low-value BHIM UPI (Person-to-Merchant) transactions.

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• The report evaluates the effectiveness of the Government’s incentive framework in promoting digital payments, strengthening payment infrastructure, and advancing financial inclusion.

• The study was conducted by an independent third-party agency in consultation with the National Payments Corporation of India (NPCI).

• 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 digital payment adoption, reduce dependence on cash, and formalize routine economic activity. 

• It provided structured budgetary support to acquiring banks and ecosystem participants to ensure that digital payments remained affordable, accessible, and sustainable for citizens and merchants.

Methodology of the Study

• The socio-economic impact analysis is based on a primary survey covering 10,378 respondents across 15 States. 

• The stakeholders surveyed included 6,167 users, 2,199 merchants, and 2,012 service providers. 

• The sample framework covered five geographical zones, North, South, East, West, and North East, and included both urban and semi-urban locations.

• The fieldwork was conducted between 22 July and 25 August 2025 using face-to-face Computer Assisted Personal Interviews (CAPI) to ensure reliable data collection.

Key Findings

• The report finds a significant and sustained rise in digital payment adoption across socio-economic segments.

• UPI emerged as the most preferred mode with 57%  share, surpassing cash transactions at 38%, primarily due to ease of use and instant fund transfer capability.

• Around 65% of UPI users reported making multiple digital transactions daily, reflecting a strong shift in everyday payment behaviour.

• Adoption is especially high among the 18–25 age group at 66%, reflecting a growing digital-first financial culture. 

• Nearly 90% of users reported increased confidence in digital payments after using UPI and RuPay cards. 

• Cashback incentives (52%) and transaction speed (74%) were key drivers of adoption.

Merchant Adoption:

• Digital acceptance among merchants is widespread, with 94% of small merchants adopting UPI. 

• About 72% reported satisfaction due to faster payments and better record-keeping, while 57% observed increased sales after going digital. 

• Incentives played a crucial role in reducing cost barriers and accelerating merchant onboarding.

Infrastructure Expansion:

• UPI’s share in digital transactions rose to nearly 80% during the scheme period. 

• UPI QR deployment expanded from 9.3 crore to about 65.8 crore. 

• The number of third-party apps increased from 16 to 38, and banks on the UPI platform grew from 216 in 2021 to 661 by 2025. 

• The period also saw declining ATM withdrawals and lower reliance on small-denomination currency.

Financial Support and Impact:

• The Government provided ₹8,276 crore in incentives between FY22 and FY25, supporting banks and payment ecosystem participants in scaling low-value digital transactions. 

• The scheme contributed to greater formalisation of the economy, improved transparency, enhanced business efficiency, and stronger fintech innovation.

Way Forward

• The report underscores the need to build a balanced digital payments ecosystem that supports all stakeholders and shares infrastructure costs sustainably. 

• It cautions against a one-size-fits-all incentive design, noting that while UPI adoption is already strong, RuPay usage still requires targeted support. 

• Recommended measures include tiered cashback programmes for RuPay transactions in Tier 2–6 cities, enabling contactless RuPay cards, and expanding international acceptance through global partnerships. 

• The report also calls for promoting small-ticket daily payments through solutions such as UPI Lite and continuing targeted incentives, particularly in underserved regions, to sustain inclusive digital payment growth.

Source:
PIB
Financial Services
PIB
PIB