The Unified Payments Interface (UPI), India’s flagship digital payments system operated by the National Payments Corporation of India (NPCI), recorded a marginal dip in both transaction volume and value during the month of June 2025. However, despite the month-on-month slowdown, the platform continues to register robust year-on-year growth, reflecting its pivotal role in India’s digital financial ecosystem.

June Sees Dip in UPI Transactions: Key Statistics

According to data released by NPCI on July 1, UPI processed 18.40 billion transactions in June, down slightly from 18.68 billion in May. In terms of value, transactions fell to ₹24.04 lakh crore, a 4.4% decline compared to ₹25.14 lakh crore in the previous month.

This follows a 4.4% increase in transaction volume seen in May, which had previously rebounded from a slump in April. The fluctuations suggest that while UPI growth is still strong year-on-year, monthly momentum may be softening due to market saturation and technical factors.

Year-on-Year Performance: Growth Remains Robust

Despite the month-on-month dip, UPI continues to exhibit strong year-on-year performance:

• Transaction volume in June 2025 was up 32% compared to June 2024.

• Transaction value increased by 20% year-on-year.

• The average daily transaction volume stood at 613 million.

• The average daily transaction value was approximately ₹80,131 crore.

These figures highlight the platform’s enduring popularity and growing user base despite occasional slowdowns.

Other Digital Payment Channels Also Face Declines

The slight fall in UPI numbers was mirrored by other digital payment mechanisms:

• IMPS (Immediate Payment Service): Processed 448 million transactions worth ₹6.06 lakh crore, down from 464 million transactions worth ₹6.41 lakh crore in May.

• AePS (Aadhaar Enabled Payment System): Transactions declined from 105 million to 97 million.

• FASTag: Toll payment transactions dropped from 404 million to 386 million.

This suggests a broader dip in digital payment activity in June, possibly influenced by seasonal factors, user fatigue, or technical disruptions.

Dominance of UPI and Market Landscape

Since its inception in 2016, UPI has revolutionized the Indian payments industry. The growth has been driven by several factors:

• Government push for digital payments post-demonetisation

• Surge in smartphone and internet usage

• Aggressive expansion by private payment companies such as PhonePe, Google Pay, and Paytm

As of May 31, 2025, UPI had 65 shareholders, including public sector banks, private institutions, and foreign players.

NPCI’s Financial Performance in FY25

NPCI has continued to show healthy financial growth:

• Net profit for the financial year ending March 2025 rose 41.7%, reaching ₹1,552 crore

• Standalone revenue for FY25 stood at ₹3,270 crore, up from ₹2,749 crore in FY24, reflecting a 19% increase

As a not-for-profit entity, NPCI records profit as revenue surplus, using it to fund further development of payment infrastructure and services.

Slowing Growth as UPI Nears Saturation

Industry analysts have noted that UPI, after several years of breakneck growth, may be approaching a natural saturation point, particularly in urban areas where digital payment adoption is already high.

The challenge now lies in expanding UPI’s reach in rural and semi-urban India, increasing merchant adoption, and maintaining service stability.

UPI MDR Remains Zero, Government Clarifies

Earlier this month, the Finance Ministry clarified that UPI transactions will continue to remain free for users and merchants. This came after widespread speculation that Merchant Discount Rate (MDR) could be introduced.

The ministry reaffirmed its commitment to keeping UPI transactions zero-cost, emphasizing that digital payments must remain accessible and inclusive. However, payment companies have long expressed concerns over monetization, citing the absence of MDR as a hurdle to sustainable operations.

Technical Glitches and Service Disruptions

UPI’s meteoric rise hasn’t been without growing pains. In recent months, users of popular apps like PhonePe, Google Pay, and Paytm have reported intermittent service disruptions.

One notable incident occurred on April 12, when a surge in API (Application Programming Interface) requests, especially from banks repeatedly hitting the ‘Check Transaction’ API, caused significant slowdowns and impacted payment success rates. NPCI has since worked on optimizing system performance to avoid future outages.

Market Share: PhonePe and Google Pay Continue to Dominate

As of the latest data available (May 2025):

• PhonePe and Google Pay continue to dominate the UPI market, accounting for over 80% of total transactions.

• New entrants like Super.Money (Flipkart-backed), Navi, Cred, and BHIM are trying to disrupt the space through innovative features and cashback rewards.

• NPCI is yet to release app-wise transaction data for June, which could further highlight market dynamics and competition.

Challenges Ahead: Monetization, Scalability, and Expansion

While UPI continues to be a world-class success story, several challenges remain:

• Monetization pressure on payment providers due to zero MDR

• Need for scalability and load management, especially during peak usage

• Ensuring financial inclusion in Tier 2 and Tier 3 cities

• Addressing cybersecurity and fraud risks as the platform grows

NPCI and partner institutions will have to innovate while balancing user experience, reliability, and security to sustain long-term momentum.

The slight dip in UPI transactions in June 2025 is not a cause for alarm, given the platform’s strong year-on-year growth and widespread adoption. However, it does signal that India’s digital payment ecosystem is maturing, and future growth will require innovation, policy clarity, and system resilience.

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