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Digital transactions soared 94 times in volume and 3.5 times in value between 2013 and 2024, buoyed by the spectacular progress of the Unified Payments Interface (UPI) and the plethora of digital payment options available, according to the Reserve Bank of India.
While in CY (calendar year) 2013, there were 222 crore digital transactions valued at ₹772 lakh crore, this has increased to over 20,787 crore transactions valued at ₹2758 lakh crore in CY-2024, per RBI’s latest half-yearly payment systems report.
Digital transactions happen through digital payment modes such as National Automated Clearing House (NACH), IMPS (Immediate Payment Service), UPI (Unified Payments Interface), Aadhaar Enabled Payment System (AePS), National Electronic Toll Collectio (NETC), Debit Card, Credit Card, National Electronic Funds Transfer (NEFT), RTGS (Real Time Gross Settlement), Prepaid Payment Instruments, Internet Banking, Mobile Banking and Others (all intrabank transactions).
UPI to the fore
The report highlighted that UPI has been the most significant contributor to the growth of digital payments in India. Its contribution to digital payments volume surged from 34 per cent in CY-2019 to 83% in CY-2024, with a remarkable CAGR of 74 per cent over five years.
In contrast, the share of other payment systems like RTGS, NEFT, IMPS, credit cards, debit cards, etc., in digital payments volume declined from 66 per cent to 17 per cent during the same period.
The report observed that at a macro level, the volume of UPI transactions increased from 375 crore in CY-2018 to 17,221 crore in CY-2024. During this period, the total value of transactions surged from ₹ 5.86 lakh crore to ₹ 246.83 lakh crore. This amounts to a five-year compounded annual growth rate (CAGR) of 89.3 per cent and 86.5 per cent in terms of volume and value, respectively.
Retail digital payments
T Rabi Sankar, Deputy Governor, in his foreword to the report, observed that retail digital payments in India have grown from 162 crore transactions in the financial year 2012-13 to over 16,416 crore transactions in the financial year 2023-24, about 100-fold increase over 12 years.
He emphasised that the remarkable growth in payment infrastructure and payment performance is also apparent in the Digital Payment Index published by RBI, which has witnessed a more than four-fold rise in the last six years (445.50 for March 2024, base 100 as of March 2018).
Cross-border remittances
The Deputy Governor noted that while domestic payment systems have become cheap and fast, cross-border payments remain expensive and slow.
The Reserve Bank is focusing on interlinking the fast payment systems (FPS) with those of other countries to offer a seamless and less costly cross-border payment experience.
Sankar said this mechanism and methodology for addressing the challenges in enhancing cross-border payments (i.e., high cost, low speed, limited access, and limited transparency) have also been recognised by the international standard-setting bodies (FSB, CPMI, etc.).
“Last year the Unified Payments Interface of India (UPI) and PayNow of Singapore were interlinked through extensive collaboration between RBI and Monetary Authority of Singapore. Recent data shows that the cost of sending a remittance has come down noticeably,” he said.
According to World Bank data, India remains the top recipient of global foreign remittances, with a record $129 billion inflow in CY-2024 (estimate), nearly double that of Mexico, the second-highest recipient with $68 billion.
The report said South Asia continues to offer the lowest remittance transaction costs worldwide, with an average of 5.8 per cent for sending $200 (Migration and Development Brief, June 2024). This rate represents an 80 basis point reduction from the global average of 6.4 per cent in the same period.
However, it still exceeds the Sustainable Development Goals (SDG) target of a three per cent ceiling, underscoring a critical area for improvement.
“The corridor from Malaysia to India is notably the most cost-effective, boasting an impressively low rate of 2.2 per cent in 2023:Q4 (2.9 per cent in 2022:Q4), well below the SDG benchmark. This contrast starkly with the higher costs observed in other corridors, particularly those leading into South Asia, where costs in the fourth quarter of 2023 spanned from 11.7 to 13.6 per cent. The United Arab Emirates to Bangladesh corridor with a peak cost of 13.6 per cent in Q4 of 2023 and it increased substantially from 5 per cent cost of remittances in the previous year Q4.” per the report.
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Published on January 29, 2025
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