UPI effect: ATM cash withdrawals fall even as cash in circulation rises

The number of ATMs in India has remained broadly at 2022 levels, but the amount of money withdrawn through each machine has fallen by around 20%, pointing to a shift in how consumers access and use cash. Deepak Shenoy, CEO of CapitalMind, said the trend reflects the growing role of digital payments in everyday transactions.

“While the number of ATMs in India is the same as 2022, the amount of money withdrawn per ATM is about 20% lower now,” Shenoy said.

The decline in ATM withdrawals comes even as cash in circulation has increased, suggesting that rising currency levels are not necessarily being driven by greater reliance on ATMs.

“Even though cash in circulation has increased, this is not cash driven through ATMs,” Shenoy said. According to him, cash may instead be withdrawn directly from bank branches, where transactions tend to involve larger sums, including those linked to real estate and other high-value purchases.

In contrast, smaller and more frequent transactions are increasingly moving to digital payment platforms, particularly the Unified Payments Interface (UPI).

UPI dominates payment volumes

UPI transactions stood at Rs 29.8 lakh crore in August, remaining close to the record Rs 29.9 lakh crore recorded in May and July 2026, according to NPCI data. The latest figures underscore the continued strength of UPI as India’s preferred digital payments platform.

Its annual transaction volume has surged from 1.78 crore in FY17 to over 24,162 crore in FY26, marking a nearly 13,000-fold increase in a decade.

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The shift in consumer payment behaviour is reflected in the Reserve Bank of India’s Payment System Report for December 2025, which highlights the rapid expansion of digital payments across the country.

India is now processing 77.6 crore digital payment transactions every day, with UPI accounting for 85.5% of all payment volumes in the second half of 2025.

UPI transactions surged to 12,191 crore in H2 2025, from 1,530 crore in H1 2021. Over the past decade, India’s digital payment volumes have grown 33-fold, highlighting the extent to which real-time payments have become part of everyday spending.

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The shift is particularly visible in debit-card usage. Debit card transaction volumes fell by 67% between calendar years 2021 and 2025, as consumers increasingly moved towards UPI-based payments.

This could also be changing the role played by ATMs. While consumers continue to use cash, they may have less need to withdraw it for routine purchases such as groceries, food, transport and other small-value transactions.

Source: RBI’s Payment System Report for December 2025

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Cash still matters for high-value transactions

The RBI report also shows that different payment systems continue to serve different purposes. While UPI dominates transaction volumes, RTGS accounted for only 0.1% of transaction volume but 68.6% of total transaction value, reflecting its role in large-value transfers.

Credit-card spending has also increased sharply, reaching ₹23.2 lakh crore in 2025, compared with ₹8.9 lakh crore in 2021.

Meanwhile, the Bharat Bill Payment System recorded more than 16-fold growth in transaction value over four years, reaching ₹14.8 lakh crore.

The emerging trend, therefore, is not necessarily the disappearance of cash but a change in how it is accessed and used. UPI is increasingly handling everyday, smaller transactions, while cash withdrawn through bank branches may continue to serve larger-value needs. For ATM networks, however, this means lower cash withdrawals per machine despite cash remaining firmly in circulation.

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