How much has India’s digital payments revolution changed in five years?

India’s digital payments landscape has undergone a dramatic transformation over the past five years, with the Reserve Bank of India’s Digital Payments Index (RBI-DPI) surging 137% between September 2020 and September 2025. But beyond the headline numbers, a new study suggests that the revolution is increasingly being driven by small, everyday transactions and broader financial inclusion.

According to a whitepaper by Pahle India Foundation, the RBI-DPI rose from 217.74 in September 2020 to 516.76 in September 2025, marking 11 consecutive periods of uninterrupted growth. The report describes the trend as a structural shift rather than a temporary spike, reflecting the combined impact of Jan Dhan accounts, UPI, Aadhaar-linked onboarding and the rise of prepaid payment instruments (PPIs).

Digital wallets

PPIs, which include digital wallets and prepaid instruments, have evolved into an important component of India’s payments infrastructure.

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Monthly transaction volumes almost doubled from 4,640 lakh transactions in November 2019 to nearly 8,750 lakh by March 2026, while monthly transaction values rose from ₹16,928 crore to over ₹28,500 crore.

In FY26, PPI volumes reached a record 98,699 lakh transactions, recovering sharply from a temporary slowdown in the previous year.

The report found that growth has been driven more by adoption and usage than by larger transaction sizes. Transaction volume growth has outpaced value growth, causing the average transaction size to decline from ₹365 to ₹326.

This suggests that Indians are increasingly using digital wallets for low-value, high-frequency activities embedded in daily life.

From food delivery to utility bills

According to the study, PPIs are now widely used for routine transactions such as utility payments, food delivery, subscriptions, transport services, entertainment and merchant payments.

Their role extends far beyond consumers.

For gig workers, PPIs facilitate reimbursements and incentive payments, allowing quicker access to funds. Small businesses and merchants use them to reduce dependence on cash and improve transaction visibility. They are also deeply integrated into e-commerce, mobility and subscription-based digital platforms.

The report noted that PPIs often serve as an entry point to digital finance for first-time users and financially underserved populations, helping expand participation in the formal economy.

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Cash and cheques

As digital payments have expanded, traditional payment methods have steadily declined.

Paper-based payment volumes fell from 6,632 lakh transactions in FY24 to 5,588 lakh in FY26, a drop of 15.7%, underscoring the shift away from cash and cheques.

Although PPIs account for only around 3.5% of total retail payment volumes, the report argues that they serve important use cases that other payment methods cannot easily replicate with the same degree of convenience and accessibility.

The next challenge

The whitepaper comes amid discussions around proposed changes to the RBI’s PPI framework.

Pahle India Foundation argues that future regulations should remain proportionate and risk-based, balancing consumer protection with ease of access and innovation. The report recommends preserving low-value, high-frequency use cases, conducting regulatory impact assessments before major changes and adopting phased implementation for significant reforms.

The study concludes that India’s digital payments success has been built on a combination of innovation, inclusion and low-friction user experiences.

Five years on, the country’s payments revolution appears to be entering a new phase—one where millions of small transactions, rather than a handful of large ones, are reshaping how Indians spend, save and participate in the digital economy.

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