UPI Is Booming Across India, Know- Why Is Demand For Cash Still Rising?
Currency in circulation has reached Rs 42.86 lakh crore despite booming UPI use. Here is why cash remains important and whether MDR could affect payments.
Currency in circulation has reached Rs 42.86 lakh crore despite booming UPI use. |
Mumbai: India’s digital payment revolution is gathering pace, with people scanning QR codes for tea and groceries to utility bills. Yet a surprising trend remains: cash circulating in the economy continues to rise.
Reserve Bank of India data showed currency in circulation reached Rs 42.86 lakh crore by August-end, registering annual growth of 12.5 percent. Why is demand for banknotes rising when UPI use is breaking records?
Why Is Cash Still Growing?
Digital payments and cash are not replacing one another. Consumers choose between them depending on convenience, location and transaction size.
RBI Deputy Governor Shirish Chandra Murmu said cash continues to be used, particularly by lower-income groups, elderly citizens and small businesses. Limited internet access, familiarity with banknotes and the ease of small informal transactions support cash demand.
Are People Moving Away From UPI?
The increase in currency circulation does not mean people are abandoning UPI. During August, the number of UPI transactions climbed 22.5 percent from a year earlier, while their total value increased by nearly 20 percent.
These figures show that India is using more digital payments and cash simultaneously. Economic growth, rising incomes and higher consumer spending can increase transaction volumes, allowing both payment methods to expand together.
Could MDR Push Merchants Towards Cash?
The cash data has drawn attention amid discussion about merchant discount rate charges on certain UPI merchant payments above Rs 2,000. Such charges would represent a cost for merchants rather than a direct levy on customers.
This has raised concerns that some businesses handling larger payments may encourage customers to use cash to avoid costs. However, the impact will depend on which transactions are covered, how charges are structured and how merchants respond.
For now, India’s payment story is not a simple contest between cash and UPI. Digital transactions are expanding rapidly, but cash remains embedded in daily life. The two systems are growing side by side, serving different users, situations and spending needs.
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