UPI Transactions to Dominate Retail Digital Payments, Projected at 90% by 2026-27: PwC India Report

UPI Transactions Expected to Reach 1 Billion per Day by 2026-27

Unified Payments Interface (UPI) transactions in India are anticipated to maintain their steady growth trajectory, with a projected milestone of 1 billion transactions per day by the fiscal year 2026-27, according to a comprehensive report titled "The Indian Payments Handbook – 2022-27" by PwC India. UPI has played a pivotal role in driving the digital payments revolution in the country, capturing approximately 75 percent of the total transaction volume in the retail segment during the period of 2022-23.

UPI Projected to Account for 90% of Retail Digital Payments by 2026-27

The PwC India report underscores UPI's increasing dominance in the retail digital payments landscape, projecting that it will account for an impressive 90 percent of the total transaction volume over the next five years. This projection highlights the growing adoption and reliance on UPI as the preferred mode of digital payment in India.

Steady Growth in Indian Digital Payments Market

The Indian digital payments market has witnessed consistent growth, with a compounded annual growth rate (CAGR) of 50 percent in terms of transaction volume. The report predicts that this upward trajectory will continue, with transaction volumes expected to surge from 103 billion in the fiscal year 2022-23 to a staggering 411 billion by 2026-27. Specifically, UPI transactions are expected to experience significant growth, reaching 379 billion transactions by 2026-27, up from 83.71 billion in 2022-23.

Credit Cards Maintain Strong Growth in Retail Digital Payments

While UPI takes the lead, the report acknowledges the significance of the credit card segment, which continues to experience robust growth in retail digital payments. Card payments, including both debit and credit cards, remain popular instruments for digital transactions. However, the report foresees a shift in dominance between debit and credit cards, with credit card transactions expected to surpass debit card transactions by the fiscal year 2024-2025.

Focus on Ecosystem Expansion and New Use Cases

Mihir Gandhi, Partner and Payments Transformation Leader at PwC India, emphasizes that the payments industry will focus on expanding the ecosystem and developing new use cases for existing payment platforms in the coming years. Areas such as embedded and ecosystem finance, digital lending based on payment transactions, and offline payments are expected to drive the next phase of growth in the payments industry. Innovation and inclusion play crucial roles in shaping a seamless digital economy in India.

Lucrative Credit Card Business Segment

The report highlights the significant revenue contribution of the credit card business to the overall card market. In the fiscal year 2022-23, revenue generated through the credit card segment accounted for nearly 76 percent of the total card revenue, making it an attractive and lucrative segment for banks, non-banking financial companies (NBFCs), and fintech firms. Credit card issuance revenue witnessed a substantial increase of 42 percent in 2022-23 compared to the previous year and is projected to grow at a CAGR of 33 percent over the next five years.

Overall, the PwC India report provides valuable insights into the future of digital payments in India. It underscores the growing dominance of UPI transactions in the retail segment, with expectations of reaching 1 billion transactions per day by 2026-27. Additionally, the report highlights the significance of the credit card industry and the potential for continued growth and profitability.