TL;DR: UPI has grown into a major part of India’s digital payments ecosystem, with transaction volumes and values rising significantly over the years. As the government introduces MDR on specified merchant transactions, this analysis looks at the growth and spread of UPI usage and the government’s financial support for promoting low-value UPI transactions.

Context

Over the past decade, UPI has become a routine part of everyday payments in India, making it the most common mode of payment for groceries, transport, utility bills and online purchases. Its instant and interoperable payment system has contributed to the rapid growth of digital payments, with UPI now handling billions of transactions.

As the UPI ecosystem has expanded, the framework governing charges on these transactions has also evolved. In September 2026, a new framework introduced MDR for specified UPI merchant transactions. P2P transactions remain free, while a 0.4% MDR applies to specified P2M transactions above ₹2,000, with exemptions and separate rates for certain categories. The government has stated that around 96% of P2M transactions will remain unaffected and that MDR is a charge within the payment ecosystem, not a charge levied on consumers.

In this backdrop, we look at the scale of India’s dependence on UPI through its transaction volume and value, the digital payments incentive paid by the government, and how the UPI ecosystem has evolved over the years.

Who compiles this data?
NPCI compiles data on UPI transactions and publishes monthly and yearly statistics on transaction volume and value across States and Union Territories. The Department of Financial Services, Ministry of Finance, ran the incentive scheme and provides data based on claims settled, with implementation routed through NPCI. Ministry of Health’s population projections for 2026 have also been used in the analysis.

Where can I download clean & structured data related to this?

Clean, structured, and ready-to-use datasets on UPI transaction volume and value, including state-wise and monthly breakdowns, are available on Dataful. A dataset on year- and bank-wise incentive disbursements for RuPay Debit Cards and low-value UPI transactions is also available on Dataful, based on RTI-sourced data and covering entities receiving ₹5 lakh or more.

Key Insights

• UPI has grown sharply in both volume and value. Annual transaction volume increased from just 1.78 crore in 2016-17 to 24,162 crore in 2025-26, while transaction value rose from ₹0.07 lakh crore to ₹314 lakh crore over the same period.

• As of July 2026, UPI recorded 92 billion transactions worth ₹118 lakh crore, compared with 74.4 billion transactions worth ₹98.2 lakh crore during the same period in 2025-26. This represents a 23.6% increase in volume and a 20.1% increase in value year on year.

• Maharashtra recorded the highest UPI transaction volume and value among states in 2025-26, followed by Karnataka and Uttar Pradesh in transaction volume, while Telangana and Tamil Nadu were among the other states with the highest transaction values.

• Per capita UPI transaction volume presents a different picture. Telangana recorded the highest usage at 268.4 transactions per person in 2025-26, followed by Delhi, Goa and Maharashtra. On the other hand, the per capita transaction volume in Uttar Pradesh is 56, while in Bihar it is 43. In other words, a person in Telangana did 4 times more transactions in 2025-26 compared to a person in Uttar Pradesh. In other words, the usage is widespread in certain states while it is not in others.

• However, this is not the case for average transaction value. The average transaction value of UPI in 2025-26 ranged from around ₹ 1110 in Assam to ₹ 1700 odd in Punjab and ₹ 2000 in Manipur.

• Data clearly shows that while the transaction values are similar in most states, the volumes vary significantly owing to how widespread the usage is. The economically stronger states recorded higher volumes.

• A substantial share of UPI transactions was classified as “Unclassified” in 2025-26. These accounted for around 40% of the total transaction volume and 36% of the total transaction value, making the unclassified category considerably larger than the transactions attributed to any individual state.

• An incentive scheme was introduced to encourage the adoption of digital payments, particularly low-value BHIM-UPI transactions among small merchants. Under the scheme, incentives are paid to banks for promoting such transactions, helping offset the costs associated with offering UPI payments without MDR.

• Government support for promoting UPI increased over the years. Under the incentive scheme for low-value BHIM-UPI transactions, the government disbursed ₹957 crore in 2021-22, ₹1,802 crore in 2022-23 and ₹3,267 crore in 2023-24 towards BHIM-UPI incentives. For 2024-25, the scheme had an estimated outlay of ₹1,500 crore.

• The incentives were concentrated among a few major participants. In 2023-24, the top five recipients accounted for about 57% of the total ₹3,267 crore paid under the scheme, indicating that a substantial share of the incentives went to a small group of participating banks and payment entities that accounted for the bulk of the transaction volume.

Why does it matter?

UPI has evolved into the most widely used payment network, with transaction volumes and values continuing to grow and substantial public funding having supported its expansion. The introduction of MDR therefore marks a change in how the UPI ecosystem is funded. The government says the framework is intended to support the long-term sustainability of UPI, with MDR revenue helping fund payment infrastructure, innovation, cybersecurity and expansion, while keeping P2P payments and most merchant transactions free.

The immediate impact is expected to be concentrated on specified higher-value merchant transactions, as the government estimates that around 96% of P2M transactions will remain unaffected. At the same time, the framework creates a new cost for eligible merchants, making its implementation and its effect on merchant payment choices, payment providers and the broader UPI ecosystem an area to watch. Another concern is about merchants passing off this burden onto the consumers. The government has also proposed directing 5% of MDR collections to a dedicated fund for expanding digital payment infrastructure and UPI adoption among small merchants and in underserved areas.

Key Numbers

• 1.78 Cr (2016-17) → 24,162 Cr (2025-26)– Number of UPI transactions

• ₹0.07 Lakh Cr (2016-17) → ₹314 Lakh Cr (2025-26)– UPI transaction value

• +23.6% ↑ UPI volume, July 2025 → July 2026

• ₹957 Cr (FY22) → ₹3,267 Cr (FY24) UPI incentives for low value transactions

• 57% of 2023-24 incentives went to Top 5 recipients