DFS Releases 2026 Report on Impact of Incentive Scheme for Digital Payments (P2M)
DFS Releases 2026 Report on Impact of Incentive Scheme for Digital Payments (P2M)
The Department of Financial Services (DFS) under the Ministry of Finance released a report during the Chintan Shivir held on 13-14 February 2026. The report studies how effective the government’s incentive scheme has been in encouraging people and businesses to use RuPay debit cards and small-value BHIM-UPI payments for merchant transactions.
The study was conducted by an independent research agency, working together with the National Payments Corporation of India (NPCI). It analyses whether the incentives helped increase digital payment usage, improve payment systems and infrastructure, and support financial inclusion by making digital payments more accessible to people across India.
The Government of India launched the Incentive Scheme to promote digital payments and reduce the use of cash. It started in the financial year 2021-22 and was continued up to 2024-25 to encourage individuals and businesses to adopt digital transactions.
Under this scheme, the government gave financial support to banks and other companies involved in digital payments. This helped keep digital payment services affordable, easy to use, and widely available for both customers and shopkeepers, while also helping bring more everyday transactions into the formal economy.
The study examined the impact of digital payments in India by conducting a large primary survey of 10,378 people across 15 states. It included around 6,167 users, 2,199 merchants, and 2,012 service providers, representing the main groups involved in the digital payments system. The survey was conducted in five regions, including North, South, East, West, and North-East and included both urban and semi-urban areas to ensure balanced representation. The interviews were conducted face-to-face between 22nd July and 25th August 2025 using a digital data collection method (CAPI) for accurate results.
The evaluation reflects that online payments have grown strongly across all income and social groups. UPI is now the most preferred payment method, used by 57% of people, compared to 38% who still prefer cash. People mainly choose UPI because it is easy to use and allows instant money transfers.
Digital payments have become a regular part of daily life. About 65% of UPI users make multiple digital payments every day. Young people aged between 18 and 25 are leading this shift, with 66% preferring UPI, showing a clear move toward digital-first habits.
The study revealed that 90% of users feel more confident after using UPI and RuPay cards. As a result, people are using less cash and withdrawing less money from ATMs. And about 52% of users are encouraged by cashback offers, while 74% say that the main advantage of digital payments is how fast they are.
Although the scheme has been very successful in increasing UPI usage and improving digital payment infrastructure, it suggests supporting more merchants to accept digital payments, encouraging small-value payments through tools such as UPI Lite, and continuing to improve internet access and digital awareness.