Amid considerations of a merchant fee on UPI payments, data reveals that cash is gaining ground again, signalling a complex shift in India’s payment landscape as both cash and digital transactions expand.
At a time when the government is weighing a merchant fee on some UPI payments, fresh data suggest that cash is also making a comeback. An analysis by The Hindu of Reserve Bank of India figures shows that the growth in cash with the public has quickened in recent years even as the pace of growth in UPI transaction value has eased. The broader picture is not one of either digital payments or cash disappearing, but of both expanding, albeit at different speeds.
According to Moneycontrol, officials are considering a Merchant Discount Rate, or MDR, on UPI payments for large merchants, with the proposed charge expected to be below 0.5% and limited to transactions above ₹2,000. The report said a decision could come within two weeks. The Ministry of Finance has separately said claims that the government is planning goods and services tax on UPI payments above ₹2,000 are false and misleading, and that no such proposal is before it.
The data cited by The Hindu show that cash growth surged during the pandemic, then slowed sharply, before picking up again. Cash with the public, which means currency in circulation minus cash held by banks, grew by about 4% in 2023-24, rose to 6.5% in 2024-25, and then to 12% in 2025-26. As of July 31, 2026, it stood at ₹41.8 lakh crore, nearly 13% above the level a year earlier.
UPI has continued to grow faster than cash, but its pace has also been easing. The Hindu reported that the value of UPI transactions rose 133% in 2019-20, then 95% in 2020-21 and 105% in 2021-22, before slowing to 20.3% in 2025-26. Growth was 18.7% in the April-August period of 2026-27, still ahead of the 13% rise in cash over the same period. Pronab Sen, the former chief statistician of India, told The Hindu that rising cash and digital payments should, in theory, be reflected in stronger inflation readings, suggesting the official figures may understate price pressures. By contrast, D.K. Srivastava of EY India said the parallel rise in cash and UPI points to a more active economy, helped by real growth above 7% in the post-Covid years.
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