India has witnessed a massive surge in digital payments over the past six financial years, with over 65,000 crore transactions totaling more than ₹12,000 lakh crore. This digital revolution has been fueled by the increasing adoption of platforms like UPI and supportive government policies, extending beyond metropolitan areas and significantly boosting financial inclusion. The rise in digital transactions has brought millions of vendors and rural users into the formal economy.

The government, in collaboration with the Reserve Bank of India (RBI), the National Payments Corporation of India (NPCI), fintech companies, banks, and state governments, has been actively promoting the adoption of digital payments across the country, including in Tier-2 and Tier-3 cities. In 2021, the RBI established the Payments Infrastructure Development Fund (PIDF) to encourage the deployment of digital payment acceptance infrastructure in Tier-3 to Tier-6 cities, North-Eastern States, and Jammu & Kashmir. As of May 31, 2025, approximately 4.77 crore digital touchpoints have been deployed through the PIDF initiative.

Digital payments have revolutionized access to financial services, particularly for underserved and unserved communities. Seamless and traceable transactions through platforms like UPI have created a robust financial footprint for individuals and businesses. These footprints serve as alternative data points for financial institutions, enabling them to assess creditworthiness even without traditional documentation. Consequently, more individuals can access formal credit channels, empowering economic participation and bringing more entities into the formal financial ecosystem. UPI and similar platforms have enabled citizens, including small vendors and rural users, to accept digital payments, reducing dependence on cash and increasing formal economic participation.

The RBI has developed the Digital Payments Index (RBI-DPI) to measure the extent of digitization of payments across the country. The latest data indicates that the RBI-DPI stood at 465.33 in September 2024, reflecting continued growth in digital payment adoption, infrastructure, and performance nationwide.

To further support small businesses and MSMEs in adopting digital payment systems, the government, RBI, and NPCI have launched various initiatives to help them expand their customer base and improve efficiency. The New Digital Credit Assessment Model for MSMEs, announced in the Union Budget 2024-25, envisions public sector banks building in-house capabilities to assess MSMEs for credit, relying on the scoring of digital footprints of MSMEs in the economy. The Union Finance Minister launched this model on March 6, 2025, leveraging digitally fetched and verifiable data to devise automated journeys for MSME loan appraisal, using objective decision-making for all loan applications and model-based limit assessment for both existing and new MSME borrowers. The digital footprints used by the model include PAN authentication, mobile and email verification, API, and GST data fetched through service providers.