Rewards trump loyalty as 83% of UPI users ready to switch apps

Bengaluru: India’s booming UPI ecosystem, which now handles over 660 million transactions daily, is undergoing a major shift: rewards and cashback have overtaken convenience and trust as the primary driver of user choice, forcing payment platforms to prioritise retention over fresh adoption.

According to a new study by Empower India, 89% of UPI users consider rewards and cashback when selecting a payment app, while 83% say they are willing to switch platforms for better offers.

Nearly 94% view rewards as important when considering a switch, and 88% actively compare apps to find superior deals.

Among those who have already changed apps, poor rewards and benefits ranked as the top reason for leaving (59%), ahead of or close to traditional factors such as ease of use (64%), trust and support (61%), and payment convenience (28%).”

India has built one of the world’s most advanced real-time payment systems,” said K. Giri, Director General of Empower India.

“The next phase of UPI growth will be defined less by adoption and more by engagement.

Consumers now expect tangible value from every transaction, turning rewards into a core part of the payments experience.”

Satisfaction LeadersThe study found clear differences in how users rate rewards programmes across major platforms:

• Amazon Pay topped the charts, with 74% of its users reporting they were “very satisfied” with rewards. It also led in perceived everyday value, with 87% of users citing rewards as a key reason for choosing the app — compared to 73% for Google Pay.

• Google Pay and PhonePe performed strongly on trust and security.

• Paytm scored well on ease of use.

• Half of Amazon Pay users (50%) highlighted cashback on everyday payments as a major draw, versus 38% for PhonePe and 35% for Google Pay.

• On ease of redeeming rewards, Google Pay led slightly at 70%, followed closely by PhonePe and Amazon Pay at 68%.

New phase of maturity

The findings indicate that core UPI features — speed, reliability, security, and widespread merchant acceptance — have become baseline expectations rather than differentiators.

As functional gaps narrow, competition is moving toward rewards programmes that deliver consistent, easy-to-claim value. With switching costs remaining extremely low, platforms that fail to match user expectations on rewards risk losing customers quickly. The study concludes that the second wave of UPI expansion will be driven primarily by retention and deeper engagement, aligning with the Reserve Bank of India’s vision for a mature digital payments ecosystem.