Today, UPI, cards, and eWallets have become the backbone of digital payments across India, with UPI being more popular than the others.
From local vegetable vendors to 5-star luxury hotels, everyone is accepting payments through the United Payment Interface (UPI). As the leading payment gateway in India, UPI has brought a major disruption in the Indian payments landscape.
Let’s find out more about how UPI, cards, and wallets are shaping India’s payment gateway ecosystem.
Emerging UPI Trends Shaping Digital Payments 2026
The era of digital payments is here to stay. The increased adoption rate is accelerated by internet penetration, SoftPOS adoption, and advanced AI-driven fraud detection systems.
Even though there have been cases where payments through digital channels like UPI, cards, and eWallets have put people into financial jeopardy, a large population of the country is using these digital payment systems.
1. SoftPOS Expansion
SoftPOS adoption is accelerating in 2026 and is led by MSMEs, gig workers, payment gateway delivery networks, and mobility services. The SoftPOS deployments are expected to increase to 34.5 million by 2027.
This will contribute towards a shift to smartphone-based acceptance. Merchants gain with this method through flexible checkout points, faster queue movements, and lower maintenance costs.
2. Credit-based UPI
UPI credit gives customers access to money, increasing their disposable income. These pre-approved lines of credit with instant checkout credit help customers pay quickly, and businesses gain from higher sales.
Already started, this service will allow users to link their RuPay credit cards or other pre-approved bank credit cards to their UPI applications. This allows for credit-based transactions, eliminating the need to have a bank balance.
3. Cross-Border UPI Transactions
UPI payment gateway in India has gone global as UPI-based transactions are already happening in several Asian countries like Singapore, Bhutan, Nepal, Sri Lanka, the UAE, Qatar, and more. Even some European nations, like France, are using UPI through partnerships. Other than these, more countries are planning to follow, like Japan, Malaysia, Thailand, and Saudi Arabia.
4. AI-Based Defense Goes Frontline
Fraud prevention is a critical part of the digital payment gateway ecosystem in India. More than 80% of the banks already use AI-driven systems to save more than $9 Billion annually.
AI and machine learning models run on the national network level to identify:
- Abnormal payment behaviors;
- Mule accounts;
- Suspicious patterns.
All happens in real-time from flagging to taking action. These operational safeguards have become the key pillar of UPI, card-powered, and eWaller transactions in India.
These AI and ML models provide adaptive risk scoring, device fingerprinting, and 3DS orchestration with automated responses. As a result, the merchants and vendors stay protected from existing and any potential fraudulent elements.
5. Merchant Focused Innovations
Merchants accepting UPI and other forms of payments have access to dynamic QR codes, smart POS systems, and seamless integration services. They can connect the payment terminals to accounting, inventory, and CRM systems.
This makes it easier to track subscription billing and recurring collections, helping businesses manage cash flow with minimal friction.
Why is UPI a Major Payments Network Growth Driver in India?
At its peak, UPI hit 20 billion transactions in a month and 613 million transactions in one day. This surge in transactions is way more than card and wallet-based transactions. But why has UPI achieved such an unprecedented scale of growth?
1. UPI is Free: For the majority of users, especially customers, UPI is free. The zero-charge transactions capability has made people adopt UPI on a large scale.
2. Smartphone and Internet Growth: India is one of the largest markets for any product, including smartphones. With hundreds of millions of smartphones and internet penetration going into the remotest areas, making UPI payments is seamless.
3. Bank and Fintech: India’s banking system is strong, and to complement it, the Fintech system is even better. Several applications are now providing UPI-powered payment services, and NPCI regularly shares data that shows an increasing number of member banks and PSPs participating in this system.
4. Favourable Policy: Where the technology is a big enabler for UPI and card-based payments to overtake cash transactions, government regulations to promote digital payments and curb cash exchange are also helping. The government is incentivizing merchants and users to adopt UPI while punishing them for using cash.
Positive Impact of UPI, Cards, and Wallets on the Indian Economy
UPI, cards, and wallets boost India’s economy by enhancing financial inclusion, cutting transaction costs, and spurring consumption. They drive GDP growth, job creation, and digital transformation while reducing cash dependency.
- Lower Dependency on Cash: UPI has encouraged people to conduct even small transactions digitally. As noted by the RBI, there are fewer ATM withdrawals and a decline in cash income, especially in urban areas.
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- Better Formalisation of Transactions: All digital transactions leave an audit trail, and this is useful for tax and compliance. For everyone involved, it will bring the small to large transactions into measurable channels. This has led to improved tax reporting and credit assessment in India.
- MSME Boost: As even the small shops and vendors have adopted digital methods to accept and send money, this has reduced the merchant onboarding costs. As several vendors have started accepting digital payments, it has led to expanded market reach.
Conclusion
UPI is one of the fastest growing financial systems in India and it is still progressing. From millions to transactions taking place in one day, the digital payments ecosystem has formalised money tracking, audit, and reporting.
Where businesses can accept and track transactions, customers find it easier to make payments with just one click with assured security arrangements. For merchants and vendors Cashfree offers an advanced UPI payment gateway in India to collect payments easily.
