Unified Payments Interface (UPI), the backbone of India’s digital transaction ecosystem, continued its remarkable growth trajectory in July 2025, with transaction values exceeding ₹25.08 lakh crore (equivalent to US$ 286.66 billion). According to data released by the National Payments Corporation of India (NPCI), UPI handled a record 19.47 billion transactions, showing 6% growth in volume and 4% growth in value over June 2025.

This robust performance signifies sustained consumer confidence in UPI-based platforms and reflects deeper integration of digital payments across India’s urban and rural economies. On a year-on-year basis, UPI's performance was even more remarkable, clocking 35% growth in volume and 22% in transaction value, compared to July 2024. However, the July 2025 figure was slightly below May’s record high of ₹25.14 lakh crore (US$ 287.35 billion), showing a small dip of 0.2%.

The daily average of UPI transactions also showed a solid increase. From 613 million daily transactions in June, the number rose to 628 million in July, marking one of the strongest daily averages since UPI’s inception.

In terms of financial inclusion and biometric-based transactions, the Aadhaar Enabled Payment System (AePS) witnessed a 6% month-on-month (MoM) increase in volume, hitting 103 million transactions. However, the transaction value dipped slightly to ₹26,585 crore (US$ 3.04 billion) from the previous month, suggesting a higher number of low-value transactions.

While UPI and AePS demonstrated solid momentum, the Immediate Payment Service (IMPS) also made a strong showing in July 2025. IMPS transaction volume rose 8% MoM to 482 million, with the total value jumping 4% to ₹6.31 lakh crore (US$ 72.12 billion). Although there was a slight 2% YoY decrease in IMPS volume, the transaction value grew 6% YoY, indicating higher ticket-size transactions compared to the previous year.

The mixed performance extended to the FASTag system, used predominantly for toll payments on Indian highways. FASTag witnessed a 4% MoM drop in transaction volume, falling to 371 million transactions. Transaction value also fell by 2% to ₹6,669 crore (US$ 762 million). These numbers reflect a continued decline from May 2025, when FASTag recorded its peak of 404 million transactions and ₹7,087 crore in value.

On a daily scale, FASTag recorded 11.95 million transactions per day in July, with an average value of ₹215 crore per day, which is lower than the daily averages observed in the previous two months.

This deceleration in FASTag activity could be attributed to seasonal factors, reduced inter-state travel, or even shifts in toll collection processes. However, given the relatively stable performance of UPI and IMPS, the broader narrative remains one of strong digital adoption and deepening penetration across sectors.

Segment-wise Breakdown:

1. UPI Performance Highlights:

• Total transactions (volume): 19.47 billion

• Total value: ₹25.08 lakh crore

• MoM growth: 6% in volume, 4% in value

• YoY growth: 35% in volume, 22% in value

• Daily average: 628 million transactions

UPI continues to dominate India’s retail payment space. As QR code adoption, merchant digitisation, and government-backed incentives increase, UPI is increasingly being used not just for person-to-person (P2P) payments but also for person-to-merchant (P2M) transactions.

2. IMPS – Resilient Amid Digital Transition:

• Volume (July): 482 million

• Value (July): ₹6.31 lakh crore

• MoM growth: 8% in volume, 4% in value

• YoY change: -2% in volume, +6% in value

Despite a small YoY decline in volume, IMPS remains a crucial pillar in real-time banking transactions. Its role is especially important for businesses and individuals who prefer bank-linked platforms over app-based interfaces.

3. AePS – Rural Penetration via Biometric Payments:

• Volume: 103 million

• Value: ₹26,585 crore

• MoM Volume Growth: 6%

• Value Change: Slight dip

AePS is increasingly important in financial inclusion efforts, particularly in Tier-2 and Tier-3 cities and rural areas. It enables digital payments for the unbanked and underbanked through Aadhaar-linked bank accounts and biometric authentication.

4. FASTag – Toll Payments Decline Again:

• Volume: 371 million

• Value: ₹6,669 crore

• MoM Volume Drop: 4%

• MoM Value Drop: 2%

• Daily average volume: 11.95 million

• Daily value: ₹215 crore

The contraction in FASTag activity for two consecutive months could be an area of concern for transport and highway authorities. It may signal a slowdown in road traffic, policy changes, or even adoption challenges at toll booths.

Key Takeaways:

• Digital payments in India continue to expand, driven by UPI's deepening user base, increased mobile internet access, and government-backed infrastructure.

• While UPI and IMPS show positive trends, the fall in FASTag transactions may warrant further observation to assess if it reflects broader consumption patterns or isolated structural factors.

• The Aadhaar-linked AePS system continues to serve as a bridge between technology and inclusion, ensuring that even the most remote villages are part of India’s digital economy.

Future Outlook:

India’s digital payments ecosystem appears well-positioned for further growth. With initiatives like Digital India, Open Network for Digital Commerce (ONDC), and plans to internationalise UPI through bilateral agreements, the momentum is likely to be sustained.

Moreover, collaborations between fintechs, traditional banks, and the NPCI are expected to create more customised and secure payment solutions, particularly for MSMEs, rural traders, and cross-border remittance channels.

Even as FASTag records a slowdown, the overall picture remains one of robust digital transformation. Policymakers and stakeholders will likely continue refining regulatory frameworks, enhancing security, and building resilience in the ecosystem to support India’s digital finance ambitions.

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