Home ／ Insights on entering the Indian market
2026.03.24
India is one of the countries where digital payments have spread most rapidly in the world. At its core is UPI (Unified Payments Interface), and according to NPCI figures, UPI transaction volume from January to December 2025 was 228.3 billion, worth 299.7 trillion rupees. Converted at the 2025 monthly average rate ($1 = 87.1 rupees), that comes to about $3.4 trillion. In 2024 the figures were 172.2 billion transactions and 246.8 trillion rupees, so this represents an increase of about 33% in volume and about 21% in value. NPCI's figures for July 2026 alone, published on August 1, 2026, also showed 23.66 billion transactions and 29.88 trillion rupees, up 22% in volume and 19% in value year on year, showing that digital payments have fundamentally transformed India's everyday economic activity.
When Japanese companies do business in the Indian market, understanding the digital payments ecosystem is essential. Consumer purchasing behavior, distribution channels, and B2B transactions have all been affected by the shift to cashless payments through UPI. This article comprehensively explains the latest trends in India's e-money and digital payments. Overview of the Indian Market as a Whole is also worth reviewing.
UPI is a real-time mobile payment system launched in 2016 by the National Payments Corporation of India (NPCI). Through a smartphone app linked directly to a bank account, instant transfers between individuals (P2P) and from individuals to merchants (P2M) are possible 24/7, 365 days a year, free of charge.
UPI's innovative qualities lie in the following points.
As of December 2025, UPI's monthly transaction volume reached 21.63 billion, or about 698 million a day. About 85% of digital payment transactions within India are made through UPI, which is no longer merely a payment method but has become the digital infrastructure of the Indian economy itself.
The UPI market is an oligopoly, with the two major players PhonePe and Google Pay together controlling more than 85% of the total. The latest 2025 data shows the following share breakdown.
| App name | Market share (by transaction volume) | Monthly transaction volume (approximate) |
|---|---|---|
| PhonePe | 48.3% | 約104億件 |
| Google Pay | 37.0% | 約80億件 |
| Paytm | 7.8% | 約17億件 |
| Others (CRED, Amazon Pay, etc.) | 6.9% | 約15億件 |
PhonePeは2022年12月にFlipkartから分離した決済事業者で、ウォルマートが大株主です。2025年に上場手続きへ入りました。Tier2・Tier3都市への積極的な浸透戦略により、最大シェアを維持しています。
Google Pay has won strong support among digitally native urban users through Google's brand strength and integration with the Android ecosystem. Beyond UPI, it is also expanding features such as international remittances and credit lines.
To prevent excessive market concentration, NPCI has been considering a regulation capping any single app's share at 30%, but in January 2025 it extended the enforcement deadline to December 2026. If this regulation is actually enforced, the structure of the UPI market could shift significantly.
a day" around FY2026-27. Notably, this growth is spreading rapidly not only in urban areas but also in Tier 2 and Tier 3 cities and rural areas as well.
Several factors are accelerating UPI's penetration into rural areas.
India's middle class The expansion of this and the spread of digital payments are mutually reinforcing, strengthening the foundation of digital consumption across e-commerce, online services, and subscription models.
Building on its success in the domestic market, UPI has been rapidly expanding internationally since 2021. As of March 2026, UPI-compatible QR code payments or interconnection with local instant payment systems have been achieved in the following countries.
Of particular note is that in October 2025, NTT DATA and NIPL (NPCI International Payments Limited), the international arm of India's payments authority, signed a memorandum of understanding aimed at introducing UPI within Japan. This is UPI's first expansion into East Asia, and as a payment service for Indian tourists and business travelers visiting Japan, it could bring new business opportunities to Japan's retail, dining, and tourism industries.
The Reserve Bank of India (RBI) launched a pilot program for the wholesale Digital Rupee (e₹) (for large interbank settlements) in November 2022, and for the retail version (for small payments between individuals and businesses) in December of the same year. The Digital Rupee is a CBDC (Central Bank Digital Currency) — a digital version of legal tender — positioned differently from UPI.
However, adoption of the Digital Rupee has not progressed as much as initially expected. The main challenges are as follows.
While RBI continues to gradually expand the pilot program, it is at a stage of reconsidering the Digital Rupee's strategic positioning in light of UPI's explosive adoption. When Japanese companies consider their payment strategy in India, it is realistic to prioritize cashless support centered on UPI for now, and treat the Digital Rupee as a subject for medium- to long-term monitoring.
One of the most closely watched developments in India's fintech industry in 2025 is the digitalization of the B2B (business-to-business) space. With UPI having made P2P and P2M payments for individuals become as ordinary as the air people breathe, focus has shifted to B2B payments and financial services as the next growth frontier.
The areas showing remarkable growth are as follows.
When Japanese companies do business in India, supporting B2B digital payments with local business partners and suppliers is key to operational efficiency. Especially for transactions with Indian SMEs, we recommend considering the introduction of a UPI-linked invoicing and payment platform.
Companies running consumer-facing businesses in India should treat UPI support as a mandatory requirement. Physical stores need to introduce UPI-QR code payments, and e-commerce sites need to integrate a UPI payment gateway. Localization for the India market as part of this, it is necessary to design a user experience matched to local payment practices.
In the accounting and financial management of a local subsidiary, strengthening integration with digital payment infrastructure, including UPI, can improve cash flow management efficiency and reduce costs. Integration with India-specific tax and logistics management, such as the GST invoicing system and digital processing of eWay Bills, is also an important point.
India's fintech market is expanding rapidly on the foundation of UPI's success. Innovative startups are emerging across diverse subsectors, including payment infrastructure, lending, insurtech, and wealthtech. India's Startup Ecosystem Investment and partnership through collaboration with these fintech players is a promising strategy for Japanese financial institutions and technology companies.
India's digital payments, centered on UPI, continue to evolve at a speed and scale unmatched anywhere in the world. Annual transactions of 228.3 billion, more than 500 million users, expansion into more than 10 countries, and entry into the Japanese market through the partnership with NTT DATA all show that UPI is establishing its position as global payment infrastructure.
For Japanese companies to succeed in the Indian market, they need to see UPI not merely as a payment method but as the foundation of India's entire digital economic ecosystem, and build it into their business strategy. Basic information on the Indian market Alongside this, we strongly recommend positioning digital payment support as the top priority in your market entry strategy.
UPI (Unified Payments Interface), launched by the National Payments Corporation of India (NPCI), is the core. Through a smartphone app linked directly to a bank account, instant transfers between individuals and from individuals to merchants are possible free of charge. The majority of digital payment transactions within India are conducted through UPI, which has become the digital infrastructure of the economy itself.
PhonePe and Google Pay, the two major players, account for most of the market, followed by Paytm and other apps. NPCI has been considering a regulation capping any single app's market share to prevent excessive concentration. If this regulation is enforced, the market structure could shift.
The Reserve Bank of India is proceeding with a pilot of the Digital Rupee, but adoption has not progressed as much as initially expected. Challenges include the fact that, since UPI already provides sufficient functionality, its additional benefit is unclear. For now, it is realistic to prioritize UPI-centered support.
UPI is advancing interconnection with Singapore, the UAE, France, South Asian countries, and others. There are also moves toward introducing it in Japan, and as a payment service for Indian tourists and business travelers visiting Japan, it could bring new opportunities to Japan's retail, dining, and tourism industries.
With consumer payments having become routine through UPI, focus has shifted to B2B payments and financial services as the next area of growth. Financial SaaS for small and medium-sized enterprises, supply chain finance, B2B payment gateways, and credit based on digital transaction data are all growing.
For consumer-facing businesses, treat introducing UPI-QR code payments at physical stores and integrating a UPI payment gateway into e-commerce sites as mandatory requirements. For business-facing businesses, integrate accounting and financial management with digital payment infrastructure, and also integrate with digital processing of GST invoices and eWay Bills, to improve the efficiency of cash flow management.
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