Payment trends: Digital transactions surge but cash still remains king! Here’s what Indians are using to pay

Cash continues to hold a strong grip on India’s payment landscape, accounting for nearly half of all transactions, even as digital payments surge across the country.A report by Care Edge Ratings found that cash usage in private final consumption expenditure (PFCE) remained at around 50% in Q1FY26. It said that even though digital payments have shown an impressive growth over the years, cash continues to be strong and coexist with it.It said, "Despite such huge growth in digital transactions, cash remains resilient. Cash usage in Private Final Consumption Expenditure (PFCE) is estimated to have reached a 50% share as of Q1FY26."While digital payments are set to dominate in the future, cash still plays a crucial role, particularly in rural and semi-urban regions where digital adoption is slower.Retail transactions, however, are increasingly digital, with paper-based instruments such as cheques now nearly obsolete. Digital payments in retail have reached 99.8%, a shift driven by government policies, better infrastructure, and widespread fintech penetration.Rising internet access has also fuelled this change, growing from 60.7% in March 2021 to 70.9% by June 2025, and expected to hit 85% by 2028. Smartphones are further boosting digital payment adoption, bringing previously unbanked populations into the formal financial system.

The report highlighted the role of the Unified Payments Interface (UPI), which recorded 54.9 billion transactions in Q1FY26 and 185.9 billion in FY25. UPI grew at a compound annual growth rate (CAGR) of 49% between FY23 and FY25, with strong adoption in tier 2 and tier 3 cities.UPI is expected to continue its rapid growth, cementing its place in India’s digital payments landscape, while cash remains a preferred payment method for many.