Swipe, tap, spend, Pg 13.

Key Highlights:

• In Q1 2025 (April-June), 34.9 billion UPI transactions (person to merchant) occurred, totaling Rs 20.4 lakh crore.
• UPI transactions equaled almost 40% of private final consumption expenditure during the quarter, up from 24% two years prior.
• In the same time frame, households spent roughly Rs 3.4 lakh crore on food and beverages via UPI, about 17% of all UPI transactions.
• In July 2025, households transferred Rs 93,857 crore to debt collection agencies and Rs 61,080 crore to security brokers via UPI.
• Currency holdings accounted for just 3.4% of gross household financial savings in 2023-24, a decline from 12.5% in 2020-21.
• ATM withdrawals in July 2025 decreased to 44 crore transactions amounting to Rs 2.3 lakh crore, nearly half of the 2019 figures.
• Currency with the public to GDP ratio has fallen from 12.9% at the end of March 2022 to 10.9% by March 2025.

Detailed Insights:

• The rapid adoption of digital payment methods by households has significantly formalized transactions across the Indian economy.
• UPI is increasingly substituting cash for both routine and non-routine transactions, impacting both formal and informal sectors.
• Digital payments are now common for utility bills, petrol, clothing, medicines, and even smaller transactions like haircuts and taxi rides.
• Despite the rise in digital transactions, India has maintained high levels of cash in circulation, similar to countries like Germany.
• The share of currency in household financial savings has consistently declined post-pandemic, indicating a shift in savings behavior.
• Decreasing ATM withdrawals suggest a reduced reliance on cash for both transaction purposes and precautionary savings.
• The growth of currency with the public has slowed to 6%, half the pace of nominal GDP growth, signaling a potential inflection point.

Key Concepts Involved:

• Formalization: The process of transitioning economic activities from the informal to the formal sector.
• UPI (Unified Payments Interface): A real-time payment system that facilitates instant fund transfers between two bank accounts on a mobile platform.
• Household Financial Savings: The portion of a household's income that is not spent and is instead saved in financial instruments.