Unified Payments Interface (UPI) transactions are projected to continue growing steadily and are expected to reach 1 billion per day by 2026-27. This would account for 90 per cent of the retail digital payments in the country.
This has been stated in a report titled “The Indian Payments Handbook 2022-27,” released by PWC India. The report also highlights that UPI accounted for approximately 75 per cent of the total transaction volume in the retail segment during 2022-23. Over the next five years, UPI is predicted to contribute 90 per cent of the total transaction volume in retail digital payments.
The Indian digital payments market has shown consistent growth, with a compound annual growth rate (CAGR) of 50 per cent in terms of volume. The market is anticipated to reach 411 billion transactions in FY 2026-27, compared to 103 billion transactions in FY 2022-23.
The report estimates that UPI transactions will increase from 83.71 billion in 2022-23 to 379 billion by 2026-27. It also emphasises the growth of the credit card segment, which remains robust and is one of the most widely used instruments for retail digital payments, following UPI. The volume of credit card transactions is projected to surpass debit cards by FY 2024-25
While credit card issuance is expected to grow at a healthy CAGR of 21 per cent over the next five years, debit card issuance is predicted to have stagnant growth with a CAGR of 3 per cent in the same period.
“The decline in debit card usage is because the major use case of debit card transactions is cash withdrawal, which can now be replaced by an easier way of withdrawing cash using UPI,” the report stated.
Mihir Gandhi, Partner and Payments Transformation Leader at PwC India suggested that in the coming years, the payments industry will focus on expanding the ecosystem and exploring new use cases for existing payment platforms.
Commenting on the matter, Gandhi said, “areas like embedded and ecosystem finance, digital lending based on payment transactions and offline payments will drive the next phase of growth for the payments industry. In the ever-evolving Indian payments landscape, innovation and inclusion are paving the way for a seamless digital economy.” Furthermore, the report highlights that revenue generated through the credit card business accounts for nearly 76 per cent of the overall revenue from cards in 2022-23, making it a profitable business segment for banks, non-banking financial companies (NBFCs), and financial technology (FinTech) firms.
The revenue from credit card issuance experienced a 42 per cent increase in 2022-23 compared to the previous year, and it is projected to grow at a CAGR of 33 per cent over the next five years.