Cash is quietly retreating from the centrestage, and nations are racing to redesign the rules of money. In India, this shift is propelled by the central bank’s willingness to integrate digital currency as part of official legal tender.
But policymakers today grapple with who will set tomorrow’s standards for transactions, privacy, and influence. This, even as over 130 countries, accounting for 98 per cent of global GDP, actively explore central bank digital currencies (CBDC).
Leaders are asking how this wave will reshape economies, multiply connections, and test the boundaries of sovereignty and inclusion.
The real force behind this transition isn’t technology, but the leadership calls and public confidence that will define the future role and reach of digital money.
Digital payments are critical infrastructure.
Global digital payments are projected to exceed $24 trillion in 2025, marking another year of explosive growth driven by both advanced and emerging economies. India continues its leadership in this space, as the Unified Payments Interface (UPI) processed over 20 billion transactions worth nearly Rs 24.9 lakh crore in September 2025 alone, with total monthly volumes reaching an all-time high.
UPI now accounts for as much as 85 per cent of India’s digital transaction volume and nearly 50 per cent of global real-time payments, solidifying its place as critical financial infrastructure, vital for national competitiveness and policy leverage.
India’s digital currency path
While much of the world experiments with crypto or stablecoins, India has taken an assured but cautious route to digital currency. The Reserve Bank’s pilot of the central bank digital currency (CBDC), known as the Digital Rupee, now counts over five million users and is supported by 16 major banks.
Uptake is gradual, in part due to UPI’s existing dominance and the public’s trust in bank-led digital payments. As of March 2025, digital rupee circulation hit Rs 10.16 billion, up 334 per cent in a year, yet still modest relative to cash or UPI flows.
The lesson? Even innovation must fit the realities of public trust, ease, and infrastructure readiness.
For India, the ultimate test will be whether digital money can coexist with cash and UPI, reliably serve both urban and rural users, and offer the security and simplicity that foster mass adoption. Policymakers must also anticipate and respond to potential hurdles around privacy, systemic risk, and cross-border usage.
Stablecoin, CBDC, and the inclusion debate
CBDCs are a sovereign response to private innovation in global payments. Where stablecoins offer programmable, borderless value transfer, especially for cross-border trade, CBDCs bring regulatory assurance and monetary control.
In India, stablecoin use is not widespread and remains outside formal regulation, though the concept of rupee-backed stablecoins is gaining attention.
Their potential is in enabling Indian startups and professionals to access global opportunities without being dependent on the dollar.
For Indian businesses, the digital rupee will likely remain the official digital tender; stablecoins might emerge as niche tools for border trade or as fintech products, provided regulatory clarity evolves.
Cash Transition via digital currency and UPI
The core context for accelerating cash transition now rests on the digital currency’s coexistence with UPI. As highlighted in the Worldline report, “UPI QRs more than doubled between January 2024 and June 2025, rising 111 per cent from 321.38 million to 678 million—transforming what began as scattered QR placement into the world’s largest merchant acceptance network.”
Biometric and PIN-less UPI pilots are also set to unlock frictionless adoption for elderly users and feature-phone segments, signalling the next inclusion frontier.
For India, the critical challenge will be ensuring digital money and UPI together reliably serve both urban and rural users—offering the simplicity, security, and mass adoption needed to advance beyond cash. The combined ubiquity of UPI and the assurance of the central bank–underwritten digital currency offer a pragmatic blueprint for broadening digital inclusion and accelerating the national cash transition.
Where India stands today
The Digital Rupee is not just a technological experiment—it is a legally recognised tender issued and guaranteed by the Reserve Bank of India. Its pilot now includes over 50 lakh users and 16 major banks across retail and institutional pilots, including State Bank of India, HDFC Bank, ICICI Bank, and Bank of Baroda. It is being tested in everyday scenarios, including merchant payments, government transactions, transit systems, and offline-mode environments.
How Digital Rupee works
* Stored in a digital wallet issued through authorised banks
* Works offline or online, including QR-based small-value payments
* Provides instant settlement without intermediary charges
* Designed like cash in digital form (no interest earned)
* Enables traceability for high-value transfers while protecting low-value privacy
Legal and operational modalities
The RBI governs issuance, wallet rules, and custody of balances, ensuring that users enjoy the same legal protection as physical currency. Merchant onboarding follows existing UPI-like frameworks, enabling interoperability across apps, banks, and acceptance points.
The successful future of this initiative is being built upon several strategic pillars: finalising robust data-privacy safeguards and user-consent mechanisms; providing upgraded offline capabilities for rural and low-connectivity zones; establishing clear modalities for cross-border and forex settlement; and ensuring seamless coexistence with UPI and India’s broader digital infrastructure.
While others debate the theoretical merits of CBDCs, India is accumulating operational knowledge at scale. And the world is watching, not because of India’s CBDC experiments, but because of what it has already deployed at scale—UPI didn’t just digitise payments; it democratised them, giving a street vendor the same transaction infrastructure as a multinational corporation.
The question now is whether India can replicate that achievement with digital currency.
The path forward isn’t mysterious. It requires building on proven strengths: interoperability, inclusion, and infrastructure that works for everyone, not just smartphone users. It demands engagement with global standard-setting bodies while protecting sovereignty over monetary policy. And it needs the same quality that made UPI succeed: the conviction that financial tools should serve people’s actual needs rather than forcing people to adapt to the technology.
India has proven that smart investment in financial innovation opens doors that reach far beyond the banking sector. The leaders who anticipate what comes next and act with vision will set the terms for prosperity in the digital era.
The author is chief delivery and operations officer (India) with Worldline, a global payment technology company
The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.