RBI publishes Payment System Report, December 2025
The Reserve Bank of India published the half-yearly Payment System Report for December 2025, covering five calendar years of payment transaction trends throu...
What Happened
- The Reserve Bank of India published the half-yearly Payment System Report for December 2025, covering five calendar years of payment transaction trends through H2 2025.
- UPI accounted for 85.5% of total digital payment transaction volumes in H2 2025, with 12,191 crore transactions processed in that half-year alone.
- Digital payments now constitute 99.8% of all payment transactions by volume and 97.8% by value across India.
- The report assessed the role of Central Counterparties (CCPs) in mitigating counterparty credit risk and strengthening financial stability.
- India's progress under the G20 Roadmap for Enhancing Cross-Border Payments was reviewed, covering UPI's international expansion to eight countries including France, Singapore, and the UAE.
Static Topic Bridges
Payment and Settlement Systems Act, 2007
The Payment and Settlement Systems (PSS) Act, 2007 (effective 2008) is the foundational legislation that empowers the Reserve Bank of India to regulate and supervise all payment and settlement systems in India — including RTGS, NEFT, and UPI. The National Payments Corporation of India (NPCI), established under this Act and promoted by RBI and the Indian Banks' Association (IBA), acts as the technical operator and settlement institution for UPI. NPCI operates as a not-for-profit organisation and sets all rules and operational guidelines governing UPI participants, including Payment Service Providers (PSPs) and Third-Party Application Providers (TPAPs). The Act's core objective is to ensure payment systems are safe, secure, efficient, accessible, and capable of managing systemic risk.
- PSS Act came into force: 2008
- NPCI mandate: not-for-profit; promoted by RBI and IBA
- UPI regulatory authority: RBI; technical operator: NPCI
- UPI QR-code payments operational in 8 countries: Bhutan, France, Mauritius, Nepal, Singapore, Sri Lanka, UAE, and Qatar
Connection to this news: The RBI Payment System Report is published under its mandate derived from the PSS Act, 2007, and the report's findings on UPI's 85.5% volume share directly reflect NPCI's role as UPI operator and the Act's success in building a robust, scalable retail payment infrastructure.
Unified Payments Interface (UPI) — Growth and Architecture
UPI is an instant real-time payment system developed by NPCI in 2016 that enables inter-bank peer-to-peer and person-to-merchant transactions via mobile devices. It operates on a "send" and "collect" framework using Virtual Payment Addresses (VPAs), enabling account-agnostic transactions. UPI's design — open interoperability, zero-MDR for small merchants, and 24×7 availability — has driven mass adoption. The International Monetary Fund has recognised UPI as the world's largest real-time payment system, accounting for 49% of global real-time transaction volumes.
- UPI launched: 2016 by NPCI
- H2 2025 transaction volume: 12,191 crore (vs. 1,530 crore in H1 2021) — a ~8x increase
- 5-year CAGR (volume): 55.8%; CAGR (value): 43%
- UPI value in 2025: ₹300 lakh crore (up from ₹72 lakh crore in 2021)
- UPI share of digital payments: 85.5% by volume, but only 9.5% by value (reflecting retail/small-ticket dominance)
- Debit card usage declined 67% — from 408.7 crore transactions (2021) to 133.6 crore (2025)
- India processes 77.6 crore payment transactions every day
Connection to this news: The RBI report's five-year data confirms UPI's structural transformation of India's payment ecosystem, displacing traditional instruments like debit cards and driving near-universal digital adoption.
Central Counterparties (CCPs) and Financial Stability
A Central Counterparty (CCP) interposes itself between the buyer and seller in a financial transaction through a legal process called novation — becoming the buyer to every seller and seller to every buyer. This eliminates bilateral counterparty credit risk and is a cornerstone of systemic risk mitigation in financial markets. In India, two CCPs are authorised by RBI under the PSS Act: the Clearing Corporation of India Ltd. (CCIL), established in April 2001, and AMC Repo Clearing Ltd. (ARCL). CCIL settles Government securities, forex, and money market transactions. RBI issued updated comprehensive CCP guidelines in October 2024, revising its 2019 framework.
- CCPs authorised by RBI: CCIL (est. April 2001; operations from 2002) and ARCL
- Minimum net worth for CCPs: ₹300 crore
- RBI–ESMA MoU: signed January 27, 2026 — enables CCIL to re-apply for recognition under EMIR (EU clearing rules), updating a 2017 pact
- Core mechanism: novation — CCP assumes counterparty risk, backed by margining and collateral requirements
Connection to this news: The Payment System Report's assessment of CCPs reflects RBI's ongoing effort to strengthen market infrastructure; the 2024 updated guidelines and the 2026 RBI-ESMA agreement signal that CCIL's regulatory standing is being aligned with global standards.
G20 Roadmap for Enhancing Cross-Border Payments
The G20 endorsed the Roadmap for Enhancing Cross-Border Payments in 2020, and in 2021 the Financial Stability Board (FSB) published 11 global quantitative targets across three market segments: wholesale payments, retail payments, and remittances. The targets aim to make cross-border payments faster, cheaper, more transparent, and more inclusive. Most targets are set for end-2027. India's RBI contributes to this roadmap through bilateral payment linkages — notably the UPI-PayNow linkage with Singapore (operationalised in 2023) and UPI QR-code acceptance in eight countries — though the FSB's 2025 progress report notes that meeting the 2027 targets remains unlikely for most jurisdictions.
- G20 Roadmap adopted: 2020; FSB quantitative targets set: 2021 (end-2027 deadlines)
- UPI-PayNow (Singapore-India) linkage: operationalised 2023
- UPI internationally active: 8 countries (Bhutan, France, Mauritius, Nepal, Singapore, Sri Lanka, UAE, Qatar)
- FSB assessment (2025): implementation of policy recommendations has been uneven; end-user outcomes remain limited
Connection to this news: The RBI Payment System Report's coverage of cross-border payments tracks India's contributions to the G20 Roadmap, particularly UPI's international expansion and bilateral payment linkages.
Key Facts & Data
- UPI volume share of digital payments in H2 2025: 85.5%
- UPI transaction volume growth 2021–2025: 3,873 crore → 22,828 crore; CAGR 55.8%
- UPI transaction value growth 2021–2025: ₹72 lakh crore → ₹300 lakh crore; CAGR 43%
- Digital payments share of all transactions: 99.8% by volume; 97.8% by value
- Daily payment transactions in India: 77.6 crore
- Debit card transaction volume decline (2021–2025): −67% (408.7 crore to 133.6 crore)
- CCPs authorised by RBI: 2 — CCIL (2001) and ARCL
- CCP minimum net worth requirement: ₹300 crore
- G20 Roadmap quantitative targets: 11 targets across 3 segments; deadline end-2027
- PSS Act enacted: 2007 (in force 2008)
- IMF recognition: UPI = 49% of global real-time transactions