Unified Payments Interface (UPI) is driving the digital payments revolution in India. According to PwC’s report titled “The Indian Payments Handbook – 2022-27”, 75% of the total transaction volume in the retail sector in 2022-23 was done using UPI. The report also claimed UPI Transaction are growing at a steady pace and may reach 1 billion per day by 2026-27. according to the report, is i Retail digital payments are estimated to account for 90% of the total transaction volume in the next five years.
How the Indian digital payments market is expected to evolve
The report claims that the Indian digital payments market has seen steady growth. At a CAGR of 50% (volume-wise), it is expected to reach 411 billion transactions in FY 2026-27 from 103 billion in FY 2022-23. “UPI is estimated to record 1 billion transactions per day by FY 2026-2027, growing from 83.71 billion transactions in 2022-23 to 379 billion transactions by 2026-27,” the report said.
The report also suggests that the credit card segment is growing at a healthy rate. After UPI, card payments (both debit and credit) are one of the most widely used instruments for retail digital payments. The report claims that the credit card transaction volume is expected to exceed that of debit cards by the financial year 2024-2025.
Over the next five years, credit card issuance is also expected to grow at 21% CAGR, while debit card issuance is likely to see a steady growth with 3% CAGR. “The decline in debit card usage is because the major use of debit card transactions is cash withdrawal, which can now be replaced by easier mode of cash withdrawal using UPI,” the report said.
mihir gandhiPartner and payments transformation leader, PwC India has said that over the next five years, the payments industry is likely to focus on ecosystem expansion and new use cases for existing payment platforms.
How the Indian digital payments market is expected to evolve
The report claims that the Indian digital payments market has seen steady growth. At a CAGR of 50% (volume-wise), it is expected to reach 411 billion transactions in FY 2026-27 from 103 billion in FY 2022-23. “UPI is estimated to record 1 billion transactions per day by FY 2026-2027, growing from 83.71 billion transactions in 2022-23 to 379 billion transactions by 2026-27,” the report said.
The report also suggests that the credit card segment is growing at a healthy rate. After UPI, card payments (both debit and credit) are one of the most widely used instruments for retail digital payments. The report claims that the credit card transaction volume is expected to exceed that of debit cards by the financial year 2024-2025.
Over the next five years, credit card issuance is also expected to grow at 21% CAGR, while debit card issuance is likely to see a steady growth with 3% CAGR. “The decline in debit card usage is because the major use of debit card transactions is cash withdrawal, which can now be replaced by easier mode of cash withdrawal using UPI,” the report said.
mihir gandhiPartner and payments transformation leader, PwC India has said that over the next five years, the payments industry is likely to focus on ecosystem expansion and new use cases for existing payment platforms.
“Areas such as 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 Gandhi noted.
The report also mentions that in 2022-2023, the revenue through credit card business will account for around 76% of the total card revenue. This makes credit cards a viable business segment for banks, NBFCs and fintech,
In 2022-2023, credit card issuance revenue to increase by 42% as compared to 2021-2022. The report states that it is expected to grow at a CAGR of 33% over the next five years.