From Access to Usage: Digital Payments and Financial Inclusion in India – A Review of Evidence and Emerging Gaps

Abstract

India has built one of the world's largest public digital payment infrastructures, anchored in the Unified Payments Interface (UPI), universal bank account programmes and biometric identity. This paper reviews the empirical and policy literature on whether this infrastructure has translated into meaningful financial inclusion, and supplements the review with secondary data from the Reserve Bank of India (RBI), the National Payments Corporation of India (NPCI) and the World Bank's Global Findex 2025. Using a structured narrative review of peer-reviewed studies, working papers and official statistics published between 2016 and 2026, the paper organises the evidence around four themes: the expansion of access, the drivers of adoption, the economic effects of digital payments, and the risks and exclusions that persist. The review finds that access has expanded dramatically: UPI processed 24.51 billion transactions in August 2026, the RBI Financial Inclusion Index rose to 70.0 in March 2026, and the share of account owners with inactive accounts fell from 35 per cent in 2021 to 16 per cent in 2024. Causal studies associate digital payment adoption with higher household income, new business formation and improved access to FinTech credit. However, usage remains uneven, with persistent gender gaps, an inactivity rate four times that of comparable economies, and limited conversion of payment activity into credit, insurance and savings. The paper argues that India's next policy challenge is to move from access to productive usage, and it proposes an agenda for research on usage depth, gender, consumer protection and the payments-to-credit pathway.