UPI has now become the king of everyday payments in India. According to official data of NPCI, DFS and RBI, UPI has left cash behind in both the number and value of transactions. However, the surprising thing is that still the total amount of cash is increasing. In such a situation, the question is whether the cash system will be completely destroyed? Will every customer get used to taking out the phone and making payment in 3-4 seconds? Let us understand in the explainer…

Question 1: How did UPI overtake cash? What does the DFS survey say?

answer: In July-August 2025, the Department of Financial Services (DFS) of the Finance Ministry, in collaboration with NPCI, conducted a major survey. In this, 10,378 people from 15 states were talked to, of which 6,167 were common users, 2,199 shopkeepers and 2,012 service providers. This survey was conducted through face-to-face interviews in urban and semi-urban areas.

The results were shocking. UPI’s share in daily payments reached 57 percent, while cash remained only 38 percent. The usage of UPI was even higher among youth aged 18-25 years, which was 66 percent. 94 percent of small shopkeepers now take payment through UPI QR code. 90 percent of users find UPI and RuPay cards more secure than cash. Both ATM withdrawals and cash usage have decreased.

The survey shows that from 2021-22 to 2024-25, the government gave incentives worth Rs 8,276 crore to promote UPI. Digital transactions increased 11 times due to cashback, low fees and easy onboarding. UPI is now handling 80 percent of the total digital payments. Small traders also got the benefit of increased sales. 57 percent people said that their sales increased due to digital payments.

Question 2: What are the month-on-month UPI figures telling?

answer: NPCI releases data every month and the entire year of 2025-26 is full of records. Let’s see one by one:

Now 45 percent of the traffic is coming from Tier-2 and Tier-3 cities and rural areas. The number of UPI QR codes has reached above 70 crores. UPI has become default everywhere in small grocery shops, pharmacies, transport etc.

Question 3: But the total amount of cash is also increasing? How?

answer: Yes, it is increasing. In January 2026, Currency in Circulation (CiC) i.e. total cash reached a record level of Rs 40 lakh crore. There is an increase of 11.1 percent year-on-year. January’s UPI value (28.33 lakh crore) is about 70 percent of CiC. Meaning UPI is handling as many transactions in a month as a major part of the total cash stock.

SBI research clearly shows that the economy is growing, people are keeping cash for caution. Especially in the unorganized sector, ATM withdrawals have increased after GST and tax notices. The good news is that the CiC-GDP ratio is decreasing. From 14.4 percent in 2021, it has now come down to around 11.2 percent. That means the relative share of cash in the total economy is decreasing. Despite UPI transaction value being higher than CiC, cash is still being used as a ‘store of value’.

Question 4: What does the UPI outage of April 1, 2026 teach?

answer: There was a big problem in UPI on April 1, 2026. Transactions failed in many cities including Delhi, Mumbai, Bengaluru, Jaipur, Pune, Kolkata, Guwahati and Chennai, apps were not loading. SBI received more than 500 complaints, UCO Bank received 40. Reason- Scheduled maintenance of SBI increased and continued till 12:30 pm. SBI itself apologized by posting on X and described UPI Lite, eRupee (CBDC) app and ATM as alternatives.

The problem was resolved within a few hours. There was no major statement from NPCI or other banks, but this incident reminds that even though trust in UPI has increased, the system is still not 100 percent fail-proof. Still, people did not run back to cash. The record figures for March 2026 prove that confidence remains.

Question 5: So will the era of cash really end?

answer: No, not completely, but the era of cash in everyday small payments is almost over. UPI has paved the way for making 80-90 percent of transactions digital in 5-10 years. NPCI’s target is to have 1 billion transactions daily by 2027. The government is further strengthening the Digital Public Infrastructure (DPI).

There will still be cash because:

• Internet and smartphone access is still limited in rural areas.
• People prefer cash in case of large amount, emergency or unorganized business.
• As the economy grows, the total amount of cash will also increase, even if its percentage decreases.