Is cash still king in UPI-dominated digital India? (2024)

Despite the growing popularity of digital payments through UPI in India, the demand for cash remains strong and shows no signs of fading away.

Recent data reveals a significant 5.51% increase in average monthly cash withdrawals from automated teller machines (ATMs) in FY2024.

A report by cash logistics company CMS Infosystems suggested that average cash withdrawals have increased from Rs 1.35 crore in FY23 to Rs 1.43 crore in FY24.

In 10 out of the 12 months of FY24, the rate of increase in average monthly ATM cash withdrawals exceeded the FY23 monthly average of 7.23%.

The report also highlighted an increase in ATM withdrawals across different regions. In metros, withdrawals surged by 10.37%, followed by a 3.94% increase in semi-urban and rural areas (SURU), and a 3.73% increase in semi-metros.

Karnataka emerged as the leader in absolute withdrawals per ATM, with an annual average withdrawal of Rs 1.83 crore, closely followed by Delhi at Rs 1.82 crore and West Bengal at Rs 1.62 crore.

In FY24, the key consumption hotspots for ATM withdrawals were identified in Delhi and Uttar Pradesh in the north, and Tamil Nadu and Karnataka in the south, with West Bengal also witnessing significant withdrawal activity.

For public sector banks, approximately 49% of ATMs are situated in metropolitan and urban areas, while the remaining ~51% are distributed across semi-urban and rural regions (SURU).

Meanwhile, in the case of private sector banks, around 64% of ATMs are located in metropolitan and urban areas, with the remaining 36% strategically placed in SURU areas to facilitate consumption spending.

In FY24, 14 out of 23 States and Union Territories witnessed a 6.45% year-on-year growth in the annual average ATM withdrawal, while 9 States and Union Territories experienced an average decline of 4.14% year-on-year.

Meanwhile, India witnessed approximately 131 billion UPI transactions amounting to a total value of Rs 200 lakh crore in FY24, as announced by Finance Minister Nirmala Sitharaman. This marks a significant increase from FY23, where UPI transactions totalled about 83.7 crore, valued at Rs 139 trillion, according to data from the National Payments Corporation of India (NPCI).

In the UPI market, PhonePe and Google Pay emerge as the top players, commanding a combined market share of 86% by volume.

Following closely are Paytm Payments Bank, which was recently barred by the Reserve Bank of India (RBI) from conducting operations after March 15, and distant contenders like Cred and the Axis Bank app, each with a market share of less than 1%.