Cash Usage Picks Up as UPI Transaction Growth Slows to 18.7% in 2026

Public holding of cash has shown an increase after registering its slowest growth in 2023-24, as per the The Hindu news report citing the RBI figures. Public holding of cash has grown from approximately 4% in 2023-24 to 6.5% in 2024-25. 

The rate of growth has been even faster, rising to 12% in 2025-26. On July 31, 2026, the public holding of cash has been recorded at ₹41.8 lakh crore, which is around 13% more than the previous year. 

Public holding of cash means cash in circulation except for the amount held by banks. Public holding of cash was growing at around 17% in 2020-21. 

UPI Growth Slows 

UPI transaction volume has been increasing; however, the pace of the rise has slowed down. The transaction volume was 133% in 2019-20, 95% in 2020-21 and 105% in 2021-22. 

After that, there was a slowing down in the pace of the increase every year. In 2025-26, it was 20.3%; while in April-August 2026. 

Cash with the public grew 13% during the same period. UPI therefore remains ahead, but the difference between the two growth rates is smaller than it was earlier. 

MDR Charge 

UPI and RuPay debit card payments are currently free. The Taxation and Other Laws (Amendment) Bill, 2026, passed during the Monsoon session, allows the government to permit an MDR charge on electronic transactions. 

Finance Minister Nirmala Sitharaman and the Payments Corporation of India have said ordinary users will not have to pay the charge. It is to apply to certain high-value merchants and transactions. 

The Opposition has said merchants facing the charge could pass the cost on to customers through higher prices. 

Inflation Data 

Retail inflation stood at 4.45% in July 2026, slightly higher than in June. Wholesale inflation was 9.8%, against 9.9% in June. 

The data shows that cash and UPI payments are both increasing. However, UPI growth has slowed while cash growth has picked up since 2023-24. 

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Conclusion 

UPI remains the faster-growing of the two in the latest period. However, cash growth has increased from 4% in 2023-24 to 12% in 2025-26. The figures show a smaller gap between the two payment channels. 

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