Outlook Business Desk
Despite the rapid rise of digital payments in India, cash remains a dominant method, continuing to play a key role across the country’s economy and everyday transactions.
According to Care Edge Ratings, cash usage in Private Final Consumption Expenditure (PFCE) stayed around 50% in Q1FY26. Despite impressive growth in digital payments, cash continues to remain strong and coexist with digital methods.
Cash also continues to play a crucial role in rural and semi-urban India, where slower digital adoption means many people rely on cash for daily transactions despite the growth of digital payments.
Retail transactions in India are now almost entirely digital, with cheques nearly obsolete. Digital payments have reached 99.8% in retail, driven by government policies, improved infrastructure, and widespread fintech adoption.
Meanwhile, Rising internet access is accelerating digital payment adoption. From 60.7% in March 2021 to 70.9% by June 2025, it is expected to reach 85% by 2028, enabling broader financial inclusion.
Smartphones are also driving the adoption of digital payments, helping previously unbanked populations access the formal financial system and participate in digital transactions across urban and semi-urban areas.
According to the report, Unified Payments Interface (UPI) recorded 54.9 billion transactions in Q1FY26 and 185.9 billion in FY25. UPI grew 49% CAGR between FY23–FY25, especially in tier 2 and tier 3 cities.