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The Unified Payments Interface (UPI) transactions soared by 42 per cent year-on-year (YoY) in the second half of 2024, totalling a remarkable 93.23 billion transactions, a new report said on Wednesday. 

India’s digital payments ecosystem continues to experience rapid growth, with significant milestones reached in the second half last year, according to a report by Worldline, a financial service provider.

The total value of UPI transactions also saw a notable increase, rising by 31 per cent to Rs 130.19 trillion.

Mobile payments have also seen a major boost, with the number of mobile transactions reaching 88.54 billion in the same period, which is a 41 per cent annual increase.

This surge reflects the growing preference among consumers for mobile-first financial solutions, driven by the convenience and accessibility of mobile wallets and apps, the report noted.

One of the key drivers of this growth has been the expansion of UPI QR code adoption, which saw an impressive 126 per cent jump, reaching 633.44 million QR codes across the country.

This development has strengthened digital payments for merchants, enabling more small businesses and local shops to embrace cashless transactions.

"India’s digital payments ecosystem is evolving at an unprecedented pace, driven by UPI’s widespread adoption, the expansion of POS infrastructure and the growing preference for mobile transactions,” said Ramesh Narasimhan, CEO, Worldline India.

Another major trend highlighted was the continued growth of Point of Sale (POS) terminals, which crossed the 10 million mark.

With a 23 per cent increase in deployment compared to the previous year, POS terminals are becoming increasingly widespread, especially in rural and semi-urban areas.

The report also emphasises the rise of SoftPOS (software point of sale) technology, which allows merchants to use their smartphones as secure contactless payment terminals.

This technology is reshaping merchant payments, particularly for small businesses, as it eliminates the need for expensive traditional POS hardware.

The implementation of MPoC (mobile payment on contactless) security standards ensures that these transactions are safe and secure, including for higher-value payments.

Additionally, the report highlights shifts in consumer spending preferences. Credit card transactions saw a 36 per cent increase, underscoring their growing role in high-value purchases.

Prepaid card usage also grew by 35 per cent, reflecting a rise in flexible payment options. Electronic toll collections, such as FASTag, grew by 12 per cent, with over 103 million tags issued, the report said.

In terms of spending patterns, grocery stores, restaurants, pharmacies and government services emerged as the top categories for in-store transactions, accounting for 68 per cent of the transaction volume and 53 per cent of the total transaction value.