Context
A recent Reserve Bank of India (RBI) study highlights Telangana as the state with the highest UPI transaction intensity, marking a significant milestone in India’s digital payment evolution. The trend reflects how urbanisation, digital literacy, and economic vibrancy are reshaping financial behaviour and reducing reliance on cash.
Key Highlights
- Telangana ranks first among all states in UPI transaction intensity, measured by per capita transaction volume.
- Karnataka, Andhra Pradesh, Delhi, and Maharashtra follow closely, indicating a strong southern and western regional dominance in digital payment adoption.
- The surge in UPI usage has been a major factor in lowering overall cash demand across the economy.
- Data from PhonePe, which handles 58% of India’s total UPI volume, was used by RBI researchers as a proxy indicator to gauge digital intensity.
Significance
The digital payments revolution is visibly altering India’s cash economy. The RBI study observed a steady fall in ATM withdrawals as a percentage of GDP, underscoring a broader shift from cash to digital modes of payment.
A key structural change is the growth of small-value transactions — especially peer-to-merchant (P2M) payments under ₹500 — for everyday expenses such as groceries, cabs, and food services. This democratization of digital payments shows UPI’s deep penetration into daily life.
High digital intensity in southern and western India, and in the National Capital Region, stems from:
- High urban concentration and tech-savvy populations.
- Greater smartphone and internet access.
- Large-scale employment migration sustaining active digital ecosystems.
Conversely, cash withdrawal intensity remains high in parts of the Northeast, Kerala, and Goa, influenced by factors like tourism, inward remittances, and limited point-of-sale digital infrastructure.