Despite India’s rapid rise in digital payments, cash continues to dominate financial life in rural areas. According to Credit Suisse, roughly 60–72% of consumer transactions in India remain in cash, especially outside urban centers. RBI officials add that cash remains a foundational medium for the informal and financially excluded segments, ensuring its resilience despite digital growth.
In This Article:
- Digital UPI Growth, But Urban Heavyweight
- Rural Adoption Lags Despite Progress
- Women’s Access: Usage Without Ownership
- Infrastructure & Trust Still Key
- Balance Between Cash and Digi: Still a Hybrid Economy
- Cash King Gradually Ceding Ground
- Cash ruling in rural India
Digital UPI Growth, But Urban Heavyweight
Meanwhile, the Unified Payments Interface (UPI) is booming nationally: in FY25 it handled over 185 billion transactions, making up nearly 84% of all retail digital payment volume. Digital payments overall now account for 99.9% of non-cash retail transactions. Reports by the IMF confirm this surge has driven down cash dependency nationwide.
Rural Adoption Lags Despite Progress
Still, adoption in rural areas remains uneven. A 2024 EY-CII survey found 38% of rural and semi-urban Indians preferred UPI, but nearly 19% relied on cash only and 11% avoided UPI altogether. RBI data shows that while merchant adoption is strong, only about 36% of rural consumers regularly use digital payment modes.
Barriers persist: limited internet infrastructure, low smartphone and device ownership, particularly among women, and low digital literacy contribute to slower uptake in villages.
Women’s Access: Usage Without Ownership
Rural women illustrate this gap: surveys in early 2025 show 76% use a mobile phone, but just 48% own one, meaning many rely on borrowed devices to transact. Though women who transact digitally rely heavily on UPI (about 89% of rural female transactors), they remain constrained by access issues and low privacy/autonomy.
Infrastructure & Trust Still Key
Common Service Centres and digital-literacy initiatives like PMGDISHA have certified over 6 crore rural Indians as digitally literate, helping bridge gaps. Innovative models like RUGR’s vernacular digital ecosystem (RUGR-Udaan, Agri-Gram, etc.) aim to provide tailored digital services to remote users. Yet surveys (e.g. Moneycontrol, Reuters) underline persistent trust issues and technological gaps, particularly for credit and recurring payments.
Compounding this, backlash over GST scrutiny in Karnataka has led rural merchants to reject UPI payments, fearing retrospective notices and lack of compliance clarity, driving a partial reversion to cash.
Balance Between Cash and Digi: Still a Hybrid Economy
Experts emphasise that India’s payment ecosystem now reflects a hybrid model; digital payments coexist with robust cash usage. Economic growth fuels demand for both modes, with older demographics and informal markets favoring cash.
RBI officials note the decline in ATM withdrawals and the shrinking share of low-denomination notes signals reduced transactional cash demand, but behavioural inertia remains strong.
Cash King Gradually Ceding Ground
- Digital momentum: Rapid UPI growth and expansion of digital literacy are narrowing the gap.
- Continued inertia: Infrastructure challenges, device access, and trust continue to limit adoption among rural users, particularly older populations and women.
- Policy push needed: Experts call for awareness in local languages, clearer tax communication, low-cost digital infrastructure, and hybrid models combining cash and digital acceptance.
Cash ruling in rural India
Cash remains the king in rural India—not out of choice alone, but because of infrastructure, literacy, trust, and socio-economic realities. While the digital tide is rising, with UPI adoption growing and literacy initiatives ramping up, financial inclusion remains uneven. For now, the rural economy remains a hybrid domain, where cash still rules the roost, but cracks in its authority are slowly appearing as digital payments deepen their reach.
By – Sonali
