UPI hasn’t only eaten into the share of cash transactions in India, but it is also impacting other means of payment.
Every Rs. 1 increase in UPI transactions reduces debit card usage by 14 paise, a report by SBI has found. The report said that UPI’s share in overall transactions has doubled since 2019, and has upturned India’s payments space.
“There is no doubt the digital payments landscape has been transformed primarily because of UPI,” SBI said. In November 2019, UPI’s share of “retail demand for money”, which includes UPI and ATM withdrawal using debit cards, was 40%. This rose to 62% in January 2021. As of May 2025, UPI’s share in the retail demand for money has zoomed to an incredible 91 percent. This means that there are nearly 9 times as many UPI transactions as cash that’s withdrawn from ATMs through debit cards.
And SBI did some statistics on the numbers, and discovered that UPI was eating into debit card usage. “It has been observed with time series analysis for the period of January 2021 to March 2025 that Rs. 1 increase in UPI transactions reduces debit card value transactions by 14 paise,” the report said. This suggested that a significant incremental spend in UPI was coming through replacement for debit card transactions — transactions which would’ve otherwise happened on debit cards were instead happening through UPI.
With UPI now accounting for 91% of retail demand for money, it suggests a large amount of formalization of India’s economy. The usage of ATM withdrawals in cash was hard to track, and this cash seeped through to the informal sectors of the economy. With now such a large fraction of money being spent through UPI, where the government can keep tabs in which accounts it’s going, will likely give the government much more insight into how money is flowing through India’s economic system. It will also help in preventing tax evasion, and bringing more financial services to India’s citizens — having a transaction history can enable all individuals to get access to loans and credit, which wasn’t always possible in a primary cash-based economy. And the enabler for this change — UPI — might just be one of the biggest success stories in post-independence India.