India’s digital economy is entering a pivotal phase. Fuelled by a young population, rapid internet adoption, and a highly supportive policy environment, India is emerging as one of the most dynamic markets for digital payments and ecommerce globally. The country’s fintech ecosystem has become a benchmark for real-time payments (RTPs), while its digital commerce is swiftly diversifying in terms of geography and product offerings. As of 2024, India is home to over 900 million internet users and over 500 million smartphone users. The convergence of mobile connectivity, financial inclusion, and innovation has set the stage for a transformative 2025.
India continues to see rapid growth in digital payments, with over 130 billion transactions expected by the end of 2025. According to Worldline, the country's instant payment system, UPI (Unified Payments Interface), accounted for over 75% of payment transaction volumes in 2024, processing over 13 billion transactions monthly. In value terms, digital payments exceeded INR 130.19 trillion (USD 1.6 trillion) during the second half of 2024 alone.
Despite digital’s dominance in volume, cash remains resilient. Approximately 60% of India's consumer expenditure is still conducted in cash, according to data from the Reserve Bank of India (RBI), especially in semi-urban and rural regions. As a result, India's payments ecosystem reflects a hybrid model: real-time, mobile-first payments coexist with cash, ATM withdrawals, and over-the-counter spending.
UPI remains the crown jewel of India’s payment infrastructure. It has revolutionised person-to-person (P2P) and merchant payments with interoperability, zero merchant fees, and 24/7 availability. From government subsidies to Kirana store QR codes, UPI has embedded itself into the daily economic fabric. Its integration with Aadhaar (India’s biometric ID) and mobile numbers creates a powerful, inclusive foundation.
In 2024, India also joined Project Nexus, a cross-border payments initiative launched by the Bank for International Settlements (BIS). This move is expected to make UPI interoperable with RTP systems in Southeast Asia and beyond by 2025–2026. Additionally, UPI QR payments are already active in countries like Singapore, the UAE, Bhutan, France, and Sri Lanka.
India's domestic payments landscape is shaped by a mix of homegrown fintech leaders and global tech entrants:
PhonePe: with over 500 million registered users, PhonePe leads the UPI ecosystem in terms of volume share. It offers P2P transfers, merchant solutions, insurance, and gold investments – all within a single super app.
Paytm: originally a mobile wallet, Paytm now offers a broad suite of services spanning QR payments, lending, insurance, and AI-driven customer tools. In 2024, it deepened its partnership with Perplexity AI to offer conversational financial guidance.
Google Pay: despite early UPI dominance, Google Pay is now focused on expanding merchant solutions and deepening its role in small business payments, EMI services, and digital commerce.
Amazon Pay: embedded into Amazon’s vast retail network, it facilitates recurring payments, BNPL offers, and utility bill payments. It plays a critical role in deepening digital wallet usage among India’s online shoppers.
CRED: initially targeting premium users for credit card bill payments, CRED has evolved into a lifestyle and lending platform for affluent Indian consumers. It also issues its own credit products and recently entered P2P payments.
Payment experiences in India are undergoing a step change with new methods that merge convenience with intelligence, some of which are further elaborated on below:
Credit on UPI
UPI’s enablement of credit-linked payments through RuPay credit cards has expanded average ticket sizes. RuPay now accounts for 16% of India’s credit card spending.
AI-powered personalisation
Platforms are embedding generative AI and machine learning (ML) tools to help consumers manage their finances. Use cases include real-time budgeting, fraud alerts, and smart nudges for savings or spending control.
Unified Lending Interface (ULI)
Rolled out by NPCI, ULI enables secure data sharing between lenders and borrowers, helping underbanked consumers access formal credit without traditional documents.
India is actively strengthening its cross-border payment ecosystem to support diaspora transactions, trade, and tourism through developments like Bharat BillPay internationalisation and the India–Mauritius local currency settlement.
Bharat BillPay internationalisation: in 2022, BBPS enabled utility bill payments for NRIs, a service expected to channel over USD 10 billion in remittance-based transactions in the next three years.
India-Mauritius local currency settlement: in 2025, India signed an MoU with Mauritius to settle cross-border trade in local currency, reducing reliance on the US dollar.
India’s ecommerce market reached USD 125 billion (INR 10.8 trillion) in FY2024 and is expected to reach USD 345 billion (INR 29.8 trillion) by FY2030, according to India Brand Equity Foundation (IBEF). Penetration beyond metros is reshaping the industry.
According to Bain & Company, Tier-3 and smaller cities now account for 60% of new online shoppers, prompting investment in regional warehousing, local-language support, and hyperlocal logistics.
Indian ecommerce is also seeing a category expansion. Q-commerce has broadened beyond groceries, with 15%–20% of its GMV now from general merchandise, electronics, and apparel. Meanwhile, trend-first fashion – driven by frequent, affordable product drops – is projected to grow 4× to USD 8–10 billion by 2028, with over half of sales expected online. More so, vernacular and voice commerce usage is increasingly proliferating. An estimated 25%–30% of new ecommerce users interact with platforms in local languages or via voice commands, prompting companies to invest heavily in vernacular UX and regional seller networks.
Amazon India: maintains leadership in electronics, logistics, and Prime-based loyalty; known for its supply chain depth and user experience.
Flipkart: strong in Tier-2 markets and known for affordability-focused campaigns; backed by Walmart, Flipkart leads in private label growth and B2C logistics.
Meesho: a mobile-first, social commerce platform serving small sellers and rural buyers; offers ultra-low-cost goods and operates on a zero-commission model.
Nykaa: dominates the online beauty and personal care segment with both marketplace and owned-brand models; now expanding into fashion and brick-and-mortar stores.
AJIO: a Reliance-backed fashion and lifestyle platform with growing traction among Gen Z and millennial shoppers, supported by physical retail tie-ins.
The Reserve Bank of India (RBI) and government regulators have remained proactive in managing the fast-evolving digital ecosystem, and several endeavours in this direction have become public.
In 2025, the RBI mandated higher run-off rates for digital deposit accounts to mitigate risks in high-growth fintech platforms. More so, FX regulations were simplified to promote cross-border trade and allow faster settlement in local currencies.
In December 2024, Reuters reported that the UPI market share cap for third-party apps, originally set at 30%, has been deferred to avoid stalling innovation.
India is on the track to become a USD 1 trillion digital economy by 2030, with RTPs, AI-enabled services, and SME digitisation driving growth. UPI transaction volumes are projected to surpass 120 billion annually, while wallet penetration could exceed 70% among mobile internet users.
With its blend of innovation, inclusivity, and ambition, India is not just catching up with global digital leaders – it’s setting new benchmarks for scale, interoperability, and impact.
Tonet Santana is a Senior Consultant for Asia-Pacific at Payments and Commerce Market Intelligence (PCMI). Tonet is a seasoned leader in payments, with nearly two decades of experience – not only in traditional banking but more recently in emerging new digital payments and technologies in local, regional, and global roles covering more than 100 markets. Having worked in the Philippines, Hong Kong, and New York, Tonet brings a unique viewpoint, a deep understanding of local nuances vis-à-vis regional and global priorities, and a great and profound appreciation of the power of diversity and inclusion.
PCMI is an advisory group focused on the global payments industry, with over 30 years of experience providing market intelligence to corporations, executing more than 500 client engagements in the payments industry since 1991. PCMI performs custom strategic engagements, including market sizing, opportunity benchmarking, market entry, customer insights, and more, covering over 50 global markets in the Americas, EMEA, and APAC regions. Visit www.paymentscmi.com to learn more.
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