New Report from the Department of Financial Services: Socio-Economic Impact of RuPay Debit Card and BHIM-UPI Incentive Scheme

The Department of Financial Services recently released a detailed report titled "Socio-Economic Impact Analysis of the Incentive Scheme for Promotion of RuPay Debit Card and Low-Value BHIM-UPI (Person-to-Merchant) Transactions." This report comprehensively evaluates the impact of the incentive schemes implemented by the government to promote digital payments.According to the report, small-value transactions through RuPay debit cards and BHIM-UPI have seen a significant increase. In particular, the acceptance of digital payments has increased rapidly among small merchants and rural areas, reducing dependence on cash.

More on the News

¨     The report evaluates the effectiveness of the Government’s incentive framework in promoting digital payments, strengthening payment infrastructure, and advancing financial inclusion.

¨     The study was conducted by an independent third-party agency in consultation with the National Payments Corporation of India (NPCI).

¨     The Incentive Scheme for Promotion of RuPay Debit Card and low-value BHIM-UPI person-to-merchant transactions was introduced in FY 2021–22 and continued through FY 2024–25 to accelerate universal digital payment adoption, reduce dependence on cash, and formalize routine economic activity.

¨     It provided structured budgetary support to acquiring banks and ecosystem participants to ensure that digital payments remained affordable, accessible, and sustainable for citizens and merchants.

Methodology of the Study

¨     The socio-economic impact analysis is based on a primary survey covering 10,378 respondents across 15 States.

¨     The stakeholders surveyed included 6,167 users, 2,199 merchants, and 2,012 service providers.

¨     The sample framework covered five geographical zones, North, South, East, West, and North East, and included both urban and semi-urban locations.

¨     The fieldwork was conducted between 22 July and 25 August 2025 using face-to-face Computer Assisted Personal Interviews (CAPI) to ensure reliable data collection.

Key Findings

¨     The report finds a significant and sustained rise in digital payment adoption across socio-economic segments.

¨     UPI emerged as the most preferred mode with 57%  share, surpassing cash transactions at 38%, primarily due to ease of use and instant fund transfer capability.

¨     Around 65% of UPI users reported making multiple digital transactions daily, reflecting a strong shift in everyday payment behaviour.

¨     Adoption is especially high among the 18–25 age group at 66%, reflecting a growing digital-first financial culture.

¨     Nearly 90% of users reported increased confidence in digital payments after using UPI and RuPay cards.

¨     Cashback incentives (52%) and transaction speed (74%) were key drivers of adoption.

Merchant Adoption

¨     Digital acceptance among merchants is widespread, with 94% of small merchants adopting UPI.

¨     About 72% reported satisfaction due to faster payments and better record-keeping, while 57% observed increased sales after going digital.

¨     Incentives played a crucial role in reducing cost barriers and accelerating merchant onboarding.

Infrastructure Expansion

¨     UPI’s share in digital transactions rose to nearly 80% during the scheme period.

¨     UPI QR deployment expanded from 9.3 crore to about 65.8 crore.

¨     The number of third-party apps increased from 16 to 38, and banks on the UPI platform grew from 216 in 2021 to 661 by 2025.

¨     The period also saw declining ATM withdrawals and lower reliance on small-denomination currency.

Financial Support and Impact

¨     The Government provided ₹8,276 crore in incentives between FY22 and FY25, supporting banks and payment ecosystem participants in scaling low-value digital transactions.

The scheme contributed to greater formalisation of the economy, improved transparency, enhanced business efficiency, and stronger fintech innovation