UPI Transaction Volume and User Adoption Metrics Experience Slowdown; Average Daily Growth Rate Drops to 24%

As per The Moneycontrol news report, India's Unified Payment Interface (UPI) has experienced a drop in transaction volume and user growth metrics.  

In May 2026, the UPI's average daily transaction growth rate slowed to 24%, a stark decrease from the 58% recorded in May 2023, as per data from the National Payments Corporation of India. 

Details on UPI's Growth Decline 

The reduction in growth stems from a larger transaction base, as the average daily transaction volume hit 749 million in May 2026 compared to 603 million in May 2025, resulting in an absolute growth of 146 million.  

The previous year saw a growth of 150 million. This decline also coincides with UPI remaining the most popular mobile payment system in India with a slow growth in daily and monthly active users. 

User and merchant expansion have been sluggish over the past 2 years, with PhonePe’s merchant network stabilising at 1.1 crore since FY23.  

The monthly active user count for PhonePe in FY26 was 30.1 crore, marking only a 4% increase from FY25.  

In contrast, Paytm’s active user base has decreased from 9 crore in FY23 to 7.7 crore by FY26. 

Stagnation in New User and Merchant Addition 

As per the report, the inability to charge a Merchant Discount Rate (MDR) has led major UPI payment entities to prioritise profits over expansion.  

This fiscal constraint has slowed the adoption and growth of new users and merchants, despite a large percentage of India's adult population remaining outside the UPI ecosystem. 

Read More: India and Nepal Launch Cross-Border Remittance Mechanism Linked to UPI and NPI Systems! 

Conclusion 

UPI growth metrics reveal a 24% rise in daily transactions by May 2026, from a larger base compared to the previous year's 58%. PhonePe's merchant network has remained at 1.1 crore since FY23, with minimal increase in user numbers. 

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