UPI Growth Hits New Peak: Who’s Winning The Race Of Digital Payments And What’s Driving

India’s digital payments ecosystem is expanding rapidly, with UPI (Unified Payments Interface) playing a dominant role in transforming financial transactions. According to the India Digital Payments Report 2H 2024, UPI accounted for 93% of all digital transactions by volume and 92% by value in December 2024.

Three major players—PhonePe, Google Pay, and Paytm—continue to dominate, showing a strong user preference for these platforms.

PhonePe Tops UPI Market Share

Among UPI apps, PhonePe maintained its leadership, processing 48% of total UPI transactions by volume, followed by Google Pay at 37% and Paytm at 7%. However, when it comes to transaction value, Google Pay led with 51%, while PhonePe handled 37% and Paytm 5%. This indicates that Google Pay is preferred for high-value transactions, while PhonePe is the most widely used for frequent, smaller payments.

Top Banks Powering UPI Transactions

The report highlights the top remitter and beneficiary banks that are facilitating India’s UPI boom. State Bank of India (SBI) emerged as the leading remitter bank, handling 4,540 million transactions, followed by HDFC Bank (1,403 million transactions), Bank of Baroda (1,125 million), Union Bank of India (1,070 million), and Punjab National Bank (954 million).

On the other hand, Yes Bank led as the top beneficiary bank, receiving 6,652 million transactions, followed by Axis Bank (1,702 million), State Bank of India (796 million), HDFC Bank (796 million), and ICICI Bank (627 million). These figures indicate Yes Bank’s strong presence in processing UPI payments, while SBI continues to lead in sending UPI remittances.

Where Are People Using UPI the Most?

The report also highlights the top sectors where UPI transactions are most commonly used, reflecting a shift from cash-based payments to digital transactions in everyday spending. Grocery stores and supermarkets have witnessed the highest UPI transactions, followed by fast food outlets, restaurants, and bakeries. Pharmacies and drug stores are also seeing high transaction volumes, indicating the increasing reliance on digital payments for healthcare essentials.

Other key sectors benefiting from UPI transactions include telecommunication services, department stores, and gaming platforms, showing that people are using UPI for both essential and entertainment-based purchases. Additionally, service stations, cigar shops, and utility bill payments (electricity, gas, water, and sanitation) are experiencing a surge in digital transactions. 

The data suggests that UPI is now the go-to payment method for both small and large-ticket transactions, making it a vital part of India's financial ecosystem.

Why This Matters

The rising adoption of UPI highlights India’s strong fintech infrastructure and increasing digital inclusion. With cash usage steadily declining, UPI is enabling secure, fast, and convenient transactions across urban and rural areas. The dominance of PhonePe, Google Pay, and Paytm, along with the support of leading banks, indicates that digital payments are set to become the backbone of India’s financial system.

Experts believe that with growing UPI adoption, government initiatives, and fintech innovations, India is poised to set global benchmarks in digital payments. The country’s shift towards a cashless economy is not just a technological advancement but also a step toward financial transparency and efficiency.

The trends highlighted in this report make it clear that UPI is no longer just a convenience—it is a necessity for millions of Indians.