UPI Transaction Growth Slows to 23.5% in FY27 So Far, Down from 33.5% in FY26

UPI recorded 92 billion transactions between April and July of FY27, up from 74.5 billion in the same four months of FY26, according to The Moneycontrol news report citing data from the National Payments Corporation of India (NPCI). This puts year-on-year volume growth at 23.5%. 

In the corresponding period of FY26, transaction volumes had grown 33.5%. The latest figure is therefore 10 percentage points lower. UPI volume growth was 41% in FY25 and close to 30% in FY26. 

Growth Has Slowed Over Two Years 

The decline in volume growth has become clearer over the past two years. From 41% in FY25, the rate has fallen by about 20 percentage points. The four-month FY27 figure and the full-year FY26 figure are not directly comparable, but both point to a slower pace. 

The movement in transaction value has been different. Value growth increased to 20% in the first four months of FY27, compared with 18.5% for the full FY26. 

MDR Remains Under Discussion 

The slowdown comes as the government considers changes to the Merchant Discount Rate (MDR) framework for UPI. MDR is the fee paid by merchants to banks and payment companies for processing digital payments. 

The government has kept MDR at zero for UPI since 2020. The Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026, on August 6, which could allow an MDR to be introduced for certain transactions. 

Large-Value Transactions in Focus 

As per the report, the government is considering an MDR of 0.25%-0.30% on high-value transactions made by large merchants. Payment companies have argued that zero MDR leaves limited revenue to fund merchant acquisition and customer incentives. 

Cashbacks and other incentives had been used by fintech companies to bring in new users and merchants. These have reduced as companies have cut spending and focused on profitability. 

UPI Accounts for 88% of Digital Payments 

UPI currently accounts for around 88% of digital transactions in India. It processes more than 23 billion transactions worth nearly ₹30 lakh crore each month. 

UPI penetration is estimated at around 40%. New-user sign-ups have also slowed, according to people familiar with the payments industry.  

The latest figures show higher transaction volumes in FY27, but at a lower growth rate than in the previous two financial years. 

Read More: Indian Startup Funding Records $383.5 Million Across 27 Deals This Week! 

Conclusion  

UPI transaction growth slowed in April-July FY27, while transaction value growth moved up to 20%. The government is also considering MDR on selected transactions. 

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