The DPI, based on March 2018, rose to 516.76 in September 2025, more than five times the original level. In contrast, the growth rate rose to 73 percent in 2019 and remained above 30-40 percent during the pandemic. The subsequent slowdown reflects a natural base effect rather than a loss of momentum, economists say.
“When you start from a low base, growth rates often look very high. As the base increases, growth becomes more normal,” said Madan Sabnavis, chief economist at Bank of Baroda. He added that even as digital transactions increase, “the amount of cash in the system has also increased at a normal pace,” making very high growth rates increasingly difficult to sustain. “You can’t suddenly double from one billion transactions to two billion; it takes time,” he said, explaining the moderation to the 10-11 percent range.
However, among the most important figures, the data shows sharp shifts between payment channels. Mobile payments continue to drive transaction volumes. In December 2025, mobile payment volume increased by almost 27 percent year-on-year, while internet payments fell by about 8 percent and ATM withdrawals fell by almost 10 percent.
“The single most important metric for digital payments adoption is user convenience, and the channel that offers maximum convenience will see higher transaction volumes, and that, very unsurprisingly, is mobile,” said Vivek Iyer, Partner and Financial Services Risk Leader, Grant Thornton Bharat. He noted that the ease of use of UPI for low-value transactions has made mobile phones the default payment interface.
However, in terms of value, internet-based payments are gaining ground. Internet banking transaction value increased by more than 24 percent year-on-year in December 2025, surpassing mobile payments, which grew by almost 17 percent. This suggests that while everyday spending shifts to mobile apps, higher value transactions continue to favor traditional online banking channels.
The underlying payment infrastructure is also evolving. The number of prepaid payment instruments (PPIs) grew by more than 57 percent year-on-year, while the number of ATMs continued to shrink. According to experts, the decline in the number of ATMs reflects the growing preference for digital channels over cash, even as access expands.
Looking ahead, Sabnavis expects growth to remain steady rather than returning to previous highs. “Growth will certainly increase as more people start using digital resources, but it cannot go back to the 20 to 30 percent level,” he said. Instead, the next phase will likely be driven by broader adoption, incremental innovation and deeper penetration into cash-dependent regions.
Published on February 19, 2026
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