UPI processes 21,860 crore transactions in FY26; peak growth seen in Dec–Jan months

Unified Payments Interface (UPI) continued its dominance in India’s digital payments ecosystem in FY26, processing 21,860 crore transactions with a total value of ₹284.7 lakh crore, according to data from the National Payments Corporation of India (NPCI).

Transaction volumes remained robust throughout the year, consistently crossing the 2,000 crore monthly mark, although growth showed signs of moderation toward the final quarter. January emerged as the strongest month, recording 2,170 crore transactions, followed closely by December at 2,160 crore and October at 2,070 crore.

In value terms as well, January led the charts with ₹28.33 lakh crore, supported by strong festive demand and year-end spending. However, momentum softened after this peak. By February, transaction volumes declined to 2,030 crore, while the total value slipped to ₹26.84 lakh crore, indicating a gradual stabilisation after rapid expansion.

Market concentration within the UPI ecosystem remained largely unchanged. PhonePe, Google Pay, and Paytm continued to dominate transaction share, maintaining their lead across both volume and value metrics. At the same time, competitive intensity is rising, with newer entrants such as Navi, Super.money, and BHIM attempting to scale their presence in a highly saturated market.

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Adding to the competitive landscape, Apple is reportedly in talks with leading Indian banks including ICICI Bank, HDFC Bank, and Axis Bank to introduce Apple Pay. However, monetisation remains a key hurdle, given India’s zero or near-zero transaction cost structure, which limits revenue opportunities for payment service providers.

On the financial front, NPCI reported a 41.7% year-on-year increase in net profit to ₹1,552 crore in FY25, as per ICRA. As a not-for-profit entity, NPCI classifies its earnings as a revenue surplus. Its total revenue rose 19% to ₹3,270 crore, compared to ₹2,749 crore in FY24. Financial data for FY26 is yet to be disclosed.

Despite strong transaction growth, the ecosystem continues to rely on government support. Over the past four years, the Centre has disbursed nearly ₹8,000 crore in subsidies to support UPI and RuPay debit card transactions, against a total allocation exceeding ₹9,000 crore.

In FY25 alone, banks and payment firms received around ₹1,000 crore in subsidies for UPI merchant transactions, significantly lower than the sanctioned ₹1,500 crore and among the lowest payouts in recent years. Subsidy disbursement for FY26, typically released toward the end of March, is still pending.

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The lack of a merchant discount rate (MDR) continues to be a structural concern for the industry. Payment players have long argued that the absence of MDR limits monetisation and long-term sustainability. Earlier this month, the Parliamentary Standing Committee on Finance recommended a graded MDR framework, signalling potential policy evolution in the future.

Meanwhile, other digital payment channels—including Aadhaar Enabled Payment System (AePS), Immediate Payment Service (IMPS), and FASTag—have either seen slower growth or a decline in usage, reinforcing UPI’s position as the backbone of India’s retail digital payments infrastructure.