Digital Financial Services and the Future of Banking: A Comparative Analysis of Online Banking, Mobile Payments and Virtual Wallets (INTERANTIONAL JOURNAL OF SCIENTIFIC RESEARCH IN ENGINEERING AND MANAGEMENT)

Summary

• UPI transaction volume grew continuously over five years from 2,233 crore transactions in FY2020-21 to 18,585 crore transactions in FY2024-25.p.5
• The total value of UPI transactions increased from ₹41.0 lakh crore in FY2020-21 to ₹260.6 lakh crore in FY2024-25.p.4
• Regression analysis demonstrated strong statistical consistency for UPI volume growth (R² = 0.979) and transaction value growth (R² = 0.996).p.5
• The average ticket size per UPI transaction continuously decreased over the study period, falling from ₹1,836 in FY2020-21 to ₹1,402 in FY2024-25.p.5
• UPI transaction volume overwhelmingly exceeded virtual wallets (PPI) in FY2024-25, recording 18,585 crore transactions compared to 702.5 crore transactions for PPI.p.5
• The year-on-year growth rate of UPI transaction volume moderated over time, decelerating from 105.9% in FY2021-22 to 41.7% in FY2024-25.p.5

Key insights

1. UPI transaction volume and transaction value exhibit a strong statistical correlation of r = 0.9965.p.5
2. The continuous decline in average transaction ticket size to ₹1,402 signals a structural pivot of UPI toward small-value, high-frequency daily usage.p.6
3. UPI recorded over 26 times the transaction volume of virtual wallets in FY2024-25, indicating that interoperable mobile payments are structurally substituting closed-loop wallets.p.6
4. Deceleration in annual volume growth to 41.7% reflects standard technological maturity rather than declining adoption.p.6
5. A survey of 100 respondents in Tamil Nadu revealed PhonePe as the most utilized wallet at 34%, with 69% of users preferring digital wallets over cash.p.3
6. Traditional online banking remains essential for high-value and complex financial services, while mobile payments absorb small everyday transactions.p.7