From UPI to Web3: How India’s fintech wave is reshaping the future of payments

India’s fintech sector is accelerating at breakneck speed, with digital payments becoming the new default across metros and smaller cities alike. From kiranas in Hyderabad to kiosks in Chandigarh, retailers are embracing cashless transactions, signaling a deep behavioral shift. Alongside UPI’s record-breaking volumes, new RBI regulations, and a growing appetite for cryptocurrencies, the landscape is evolving into one of the world’s most dynamic digital economies.

Fintech is forging ahead in India. And why not. According to a survey called “How India Pays”, by NeoGrowth, a fintech NBFC, 74% of retail spends in top cities are digital, signaling a shift in the way India pays.

Hyderabad (82%), Bengaluru (79%), and Pune (79%) lead the top-city rankings, while Visakhapatnam (76%), Nagpur (71%), and Chandigarh (68%) dominate beyond metros. Ahmedabad (60%), Kolkata (55%), Jamshedpur (54%), Madurai (52%), and Rajkot (48%) show comparatively lower levels of digital adoption, highlighting the diversity in payment behaviors across cities.

“Digital payments in India have moved on from being an urban privilege to becoming a national standard.” — Arun Nayyar, Managing Director and CEO of NeoGrowth

Arun Nayyar, Managing Director and CEO of NeoGrowth said, “Digital payments in India have moved on from being an urban privilege to becoming a national standard. What we are witnessing is a behavioural transformation, powered by technology. From kiranas to kiosks, India’s retailers are redefining adoption and efficiency in digital modes of transacting. This is accelerating the formalisation of the economy by creating digital trails. At the same time, it’s generating rich data and laying the groundwork for more democratic access to credit. We believe this shift is not just about convenience of payment, it’s about trust in a future-ready ecosystem.”

Everyday categories like personal grooming (83%), education (81%) and dining (80%) lead the adoption charts, while groceries (68%) and fuel (63%) are fast catching up. In fact, nearly 80% business revenue of young retailers’ is coming from digital transactions, with seasoned entrepreneurs (age 50+) catching up fast with 68%. Smaller businesses (<INR1 Cr turnover) have 79% digital retail transactions, outpacing mid- and large-sized businesses.

Recently, the RBI issued a new, consolidated Master Direction to regulate Payment Aggregators (PAs), superseding all previous guidelines. This move is aimed at streamlining compliance, protecting consumers, and strengthening oversight of the digital payments ecosystem.

“RBI’s Master Directions on Payment Aggregators bring much-needed clarity to the operations of online, offline, and cross-border players. By standardizing licensing, merchant due diligence, and escrow norms, the RBI has taken a decisive step to safeguard customers while enabling responsible innovation.” — Sanjay Tripathy, CEO and Co-Founder, BRISKPE

Sanjay Tripathy, CEO and Co-Founder, BRISKPE, said, “RBI’s Master Directions on Payment Aggregators bring much-needed clarity to the operations of online, offline, and cross-border players. By standardizing licensing, merchant due diligence, and escrow norms, the RBI has taken a decisive step to safeguard customers while enabling responsible innovation. The move also acknowledges the rising importance of seamless international payments for Indian businesses and consumers, strengthening transparency, trust, and stability across the ecosystem. With clear authorization timelines, players like us now have a predictable path to compliance and growth. Most importantly, the directive consolidates fragmented guidelines into a single framework streamlining compliance and building resilience for the entire payments industry.”

Recently, HSBC Group Chairman Mark Tucker and Group CEO Georges Elhedery met Prime Minister Narendra Modi in New Delhi this week. The discussions highlighted India’s transformative policy initiatives and HSBC’s commitment to supporting the country’s global integration.

Cryptocurrency is also a field that India is adapting to. As per Chainalysis’ latest report, India and the US are leading in cryptocurrency adoption.

“Digital assets are becoming an integral part of retail and institutional portfolios in the country, and we see it most obviously in the growing retail participation in Web3. That said, India isn’t just a massive consumer market, it’s also emerging as a hub for innovation and web3 startups.” — Devika Mittal, Regional Head at Ava Labs

Devika Mittal, Regional Head at Ava Labs, says, “Digital assets are becoming an integral part of retail and institutional portfolios in the country, and we see it most obviously in the growing retail participation in Web3. That said, India isn’t just a massive consumer market, it’s also emerging as a hub for innovation and web3 startups.

“The industry continues to grow due to growing cooperation between industry players such as BWA and the government, and due to hope of clearer regulations on the horizon. The country’s citizens don’t want to miss out on the next “big thing,” which is why people are educating themselves and participating in web3 in a big way even as the situation currently stands.”

This month, UPI transactions rose 2.8% month-on-month to 20.01 B in August, touching a fresh all-time high, according to data release by National Payments Corporation of India (NPCI).

“A 34% year-on-year surge and steady month-on-month growth show that while digital payments may have started as an urban trend, they are now rapidly catching on in rural Bharat and becoming a way of life for millions.” — Dilip Modi, Founder & CEO of Spice Money

Dilip Modi, Founder & CEO of Spice Money, called it a remarkable milestone that reflects the depth and resilience of India’s digital economy, “A 34% year-on-year surge and steady month-on-month growth show that while digital payments may have started as an urban trend, they are now rapidly catching on in rural Bharat and becoming a way of life for millions. From small merchants and farmers to gig workers and daily wage earners, we are witnessing how trust in UPI has grown because of its simplicity, speed, and near-zero transaction cost.

“This achievement is also a tribute to the strength of India’s digital public infrastructure and the pioneering role of NPCI in making finance more inclusive and innovative. What excites me most is that UPI is going beyond payments to create digital transaction records that can eventually help underserved communities access credit, insurance, and savings products more easily.

“At Spice Money, our Adhikaris see this transformation every day. Rural India is moving from cash-first to digital-first, rewriting its financial story. UPI’s scale reinforces India’s position as a global leader in digital payments and proves that with the right infrastructure, awareness, and trust, technology can truly empower every citizen and transform the economy from the grassroots up.”

According to the NPCI data, Unified Payments Interface (UPI) processed an all-time high of 19.47 billion transactions worth Rs 25.08 lakh crore in July.

India’s fintech story is no longer just about convenience. It’s about building a future-ready financial ecosystem that’s trusted, transparent, and world-leading.