Monthly UPI volume slips to 24.07 billion from August’s record, but daily activity reaches new highs as festive spending supports digital payments

India’s Unified Payments Interface (UPI) recorded a marginal decline in monthly transactions in September 2026 after reaching a record high in August. However, daily payment activity and transaction values continued to show the growing role of digital payments in the country’s economy.

According to data released by the National Payments Corporation of India (NPCI), UPI processed 24.07 billion transactions worth ₹29.37 trillion in September. Transaction volume declined 1.8 per cent from August’s 24.51 billion, while transaction value fell 1.5 per cent from ₹29.82 trillion.

Despite the month-on-month decline, UPI transactions grew 23 per cent in volume and 18 per cent in value compared with September last year. The figures indicate that digital payments continued to expand annually, even as monthly activity eased from August’s record levels.

The September data comes ahead of the scheduled October 15 introduction of a revised merchant discount rate (MDR) framework for certain higher-value UPI payments to businesses. The change has prompted concerns among some traders about payment-processing costs and its possible effect on merchant behaviour.

Daily UPI Payments Cross 800 Million for the First Time

One of the most notable developments in September was the increase in average daily UPI activity.

Indians made an average of approximately 802 million UPI payments a day, with the average daily transaction value reaching ₹97,913 crore. Both figures were reported as records, with daily transaction volume crossing 800 million for the first time.

The daily data provides a more detailed picture than the month-on-month decline alone. While total transactions were lower than August’s record, payment activity remained exceptionally high throughout September.

Cashfree co-founder Reeju Datta attributed the increase in daily transaction value partly to the beginning of the festive season. Ganesh Chaturthi fell in mid-September, supporting spending associated with celebrations.

Datta said that daily transaction values had remained around ₹96,000 crore between April and August, even as payment volumes increased. In September, the additional spending helped push the daily value above that level.

The trend suggests that both the frequency and average value of payments can influence UPI’s monthly performance.

Why Monthly Transactions Declined

September’s decline should be viewed against August’s record base. A month-on-month reduction does not necessarily indicate a structural slowdown, particularly when year-on-year growth remains strong.

Festive spending patterns, the number of calendar days, consumer purchasing behaviour and the timing of major shopping events can all influence monthly payment totals.

The introduction of the MDR framework has also become a subject of debate among merchants and trade associations. However, the available monthly data does not establish that the upcoming fee caused September’s decline.

The more important indicators to monitor will be transaction growth after the October 15 rollout, changes in average payment values, and whether merchants alter their acceptance policies for higher-value transactions.

What Changes Under the New UPI MDR Framework?

The revised framework is scheduled to take effect on October 15, 2026. Under the announced rules, a 0.40 per cent MDR will apply to specified person-to-merchant (P2M) UPI transactions above ₹2,000, subject to applicable exemptions and caps. The maximum MDR is ₹300 per transaction. <Cite refs={["turn771672search0","turn771672search1","turn771672search3"]}/>

MDR is a payment-processing fee associated with accepting digital payments. Under the revised framework, the fee is payable by eligible merchants and distributed among participants in the payments ecosystem, rather than being a direct charge on consumers.

The government has clarified that person-to-person (P2P) UPI transfers will remain free irrespective of the amount. Merchant transactions up to ₹2,000 and transactions covered by the zero-MDR framework for small merchants will also remain exempt. The government estimates that approximately 96 per cent of P2M transactions will remain unaffected. <Cite refs={["turn771672search0","turn771672search1"]}/>

The distinction between transaction types is important: the new framework does not mean that every UPI payment above ₹2,000, or every payment made through a QR code, will automatically attract a fee.

Will Consumers Have to Pay More?

Under the announced framework, MDR is not supposed to be charged directly to consumers. The government has said that the revised structure is intended to support the sustainability and expansion of the UPI ecosystem while protecting individuals and small merchants from additional charges. <Cite refs={["turn771672search0","turn771672search2"]}/>

For consumers, the key issue will be how merchants respond to their own payment-processing costs. Businesses will need to assess the applicable rules, exemptions and fees when deciding how to manage eligible transactions.

Consumers should distinguish between an authorised payment-processing charge under the merchant framework and an additional fee independently demanded by a seller. The latter should not be assumed to be permitted merely because MDR has been introduced.

Small Merchants and Traders Remain a Key Focus

Small businesses have been central to UPI’s expansion, particularly because QR-based payments allow vendors to accept digital payments without investing in conventional card-terminal infrastructure.

The zero-MDR provision for eligible small merchants is intended to preserve this advantage. Nevertheless, some traders have raised concerns about the potential effect of fees on eligible higher-value transactions and the administrative burden of understanding the new rules.

The actual impact will depend on the distribution of transactions across merchant categories, the proportion of payments that qualify for exemptions and how payment providers implement the framework.

For larger merchants, payment-processing costs may become a more visible component of digital-payment economics. For small vendors covered by the exemption, the direct MDR impact is expected to remain limited under the announced rules.

IMPS Transactions Decline, but Transaction Value Edges Higher

UPI was not the only payment system to record a change in September.

Immediate Payment Service (IMPS) transactions declined by more than 1.7 per cent to 354 million from 360 million in August. Compared with September last year, transaction volume fell 10 per cent.

However, the value of IMPS transactions increased to ₹7.06 trillion from ₹7.04 trillion in August, representing an 18 per cent rise year-on-year.

Average daily IMPS transactions increased to 11.80 million from 11.61 million in August. Average daily transaction value also rose to ₹23,530 crore from ₹22,701 crore.

The divergence between volume and value indicates that fewer transactions can still generate a higher total value when the average amount transferred increases.

Aadhaar-Enabled Payments Ease in September

The Aadhaar-Enabled Payment System (AePS) also registered a month-on-month decline.

AePS transactions fell 8 per cent to 95.78 million in September. Transaction value declined 9 per cent to ₹23,734 crore from ₹26,035 crore in August.

Average daily AePS transactions dropped to 3.19 million from 3.35 million, while daily transaction value decreased to ₹791 crore from ₹840 crore.

AePS supports transactions using Aadhaar-based authentication and is used for services such as cash withdrawals and balance enquiries, including through business correspondents. Its monthly performance therefore reflects a different payment-use pattern from UPI’s widespread retail and merchant transactions.

Digital Payments Outlook: October Will Be a Key Test

September’s figures show that UPI remains a high-volume digital payment network, with annual growth continuing despite a small monthly decline. Record average daily transactions and transaction value also point to sustained activity as the festive season begins.

The next important milestone will be the October 15 MDR rollout. Its effects will need to be assessed through subsequent NPCI data, merchant feedback and changes in payment behaviour rather than inferred from September’s figures alone.

Investors and businesses operating in banking, fintech, merchant acquiring and payment infrastructure will be watching transaction growth, processing economics and the cost of supporting the network. Merchants will need to understand the applicable categories and exemptions, while consumers should remain aware that ordinary person-to-person transfers and eligible low-value merchant payments are intended to remain free.

Digital Payments Outlook: UPI’s long-term trajectory will depend on maintaining consumer convenience and merchant acceptance while ensuring the payments ecosystem can finance its infrastructure, security and service requirements. October’s transaction data should offer an early indication of whether the revised MDR framework changes payment patterns or leaves the network’s broader growth trend largely intact.