What Factors have Contributed to the Growth in the Unified Payments Interface in India?

The Unified Payments Interface (UPI), introduced in 2016, has driven the rapid growth of cashless transactions and digital adoption in India. By 2023, India led global real-time payments, processing 129 billion transactions. Using data from the Reserve Bank of India across 30 states and union territories, this study examines the factors driving UPI’s growth. We analyze panel data from 2018 to 2021, incorporating variables related to financial literacy, infrastructure, economic indicators, and demographics. Employing an Ordinary Least Squares model, we regress the log of the volume of UPI transactions per 1,000 people on these determinants. Our findings reveal that UPI adoption is positively associated with mobile phone penetration, insurance coverage, and per capita income, while reliance on cash-based indicators, such as deposits per ATM, negatively impacts its usage. These results underscore the importance of digital infrastructure and financial inclusion in fostering UPI adoption.