As India's digital payments landscape continued its growth in the first half of 2026, UPI Transaction Value jumped by more than ten folds to cross Rs 314.23 lakh crore in the FY2025-26, compared to Rs 41.03 lakh crore in FY2020-21, according to Grant Thornton Bharat's India Payments Trends Report 2026 (H1). UPI transaction volume also surged by 60.9% to 24,162 crore in the year, compared to 2,233 crore in FY2020-21. UPI Transaction Value grew by 50.2% over the same period to 1,00,997 crore.

Key Highlights 

• UPI transaction value swelled to Rs 314.23 lakh crore in FY26, increasing at a CAGR of 50.2% since FY21.
• PhonePe and Google Pay accounted 79.5% of UPI transaction volume and 82.7% of value in May 2026.

Though merchant acceptance, new use cases and depth of penetration in consumers continued to be positive drivers of UPI growth, the moderation in growth during FY26 can be attributed to the scale that UPI has attained, said Grant Thornton.

Broader Digital Payments Ecosystem Sees Sharp Growth

The wider  Indian digital payments has also expanded significantly. Digital payment transaction volumes rose from 4,572 crore in FY2019-20 to 22,831 crore in FY2024-25, a CAGR of 37.9%. On the other hand, transaction value increased at a much lower rate of CAGR of 3.5% during the same period, from Rs 2,953 lakh crore to Rs 3,509 lakh crore. The report said it had seen this split as UPI transactions that are low value and high frequency have become prevalent in the payments ecosystem.

Acceptance Infrastructure Expands Rapidly

This development has been driven in large part by the growth in acceptance infrastructure. The deployment of the Point-of-Sale (PoS) terminals grew from 45.2 lakh in May 2021 to 115.3 lakh in May 2026, while Bharat QR and UPI QR deployments together reached 7,854 lakh in May 2026. As UPI has gained acceptance as the top choice for consumers in India, merchants are increasingly choosing to accept payments using QR, especially smaller retailers, the report added.

Market Remains Concentrated Among Top Players

Despite the platform's rapid growth, the UPI market remains highly concentrated. PhonePe and Google Pay together accounted for 79.5% of transaction volume and 82.7% of transaction value in May 2026. Grant Thornton said strong merchant acceptance, user familiarity and deep ecosystem integration have created significant network effects, posing considerable barriers to scale for newer entrants in the space.

Fraud and Cybersecurity Gain Growing Importance

Alongside this growth, fraud and cybersecurity have become increasingly critical areas of focus. Grant Thornton noted that fraud incidence deteriorated as digital payment volumes rose through September 2025, but began stabilising from November onwards - a trend potentially aided by wider deployment of AI-based mule-account detection systems and integration of the Financial Fraud Risk Indicator framework. Despite the rise in fraud activity during the period, overall losses remained a negligible proportion of the broader payments ecosystem.

Also Read: UPI Dominates India's Digital Payments with 85.5% Share: RBI Report

Regulatory Focus Shifts Toward Stronger Consumer Protection

Regulatory attention is also increasingly shifting toward stronger consumer protection measures. The Reserve Bank of India (RBI) is exploring a system-wide "Kill Switch" mechanism that could allow customers to instantly block outgoing digital payments in cases involving fraud, cyberattacks, device theft or unauthorised account access.

The RBI has also proposed a Payments Switching Service that would allow customers to retain their existing bank account numbers even while switching banks - a move expected to reduce customer switching barriers and potentially increase competition among banks in the broader financial services ecosystem.