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Digital payments contribute 99.8 pc of India's retail payments in Q1 FY26: Report

New Delhi, Oct 13 || Digital transactions contributed 99.8 per cent of India's retail payments in the first quarter of the current financial year (Q1FY26), with paper-based instruments (cheques) nearly obsolete, owing to policy push, infrastructure support, and deep fintech penetration, a report said on Monday.

Digital payments, led by Unified Payment Interface (UPI), Aadhaar-enabled payment system (AePS), Immediate Payment Service (IMPS), and others, dominate retail transactions, accounting for 92.6 per cent of payment value and 99.8 per cent of transaction volume as of the first quarter of the current fiscal (Q1 FY26).

"It highlights that rising internet penetration (from 60.7 per cent in March 2021 to 70.9 per cent in June 2025) and smartphone usage have accelerated this shift, enabling financial inclusion by bringing previously unbanked populations into the formal digital economy," CareEdge Analytics and Advisory said in its report.

According to the report, UPI is the driving force behind the behavioural shift of growing digital transactions, with 54.9 billion transactions in Q1FY26 and 185.9 billion transactions in FY25.

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