UPI transactions to reach 1 bn daily by FY27: Report

This will be accounting for 90% of all retail digital payments in the country

May 29, 2023

In the previous FY23, UPI already dominated the retail segment, contributing to approximately 75% of the total transaction volume

In the previous FY23, UPI already dominated the retail segment, contributing to approximately 75% of the total transaction volume

The Indian digital payments market has been expanding at a compound annual growth rate (CAGR) of 50%

UPI transactions are anticipated to rise from 83.71 billion in 2022-23 to a remarkable 379 billion transactions by 2026-27

India’s United Payments Interface (UPI) transactions are expected to reach 1 billion per day by FY2026-2027, according to a  recent report by PwC India titled “The Indian Payments Handbook 2022-27”. 

In the previous fiscal year (2022-23), UPI dominated the retail segment, contributing to approximately 75% of the total transaction volume. Over the next five years, UPI is expected to further strengthen its position and account for 90% of all retail digital payment transactions.

The report highlights the remarkable growth of the Indian digital payments market, which has been expanding at a compound annual growth rate (CAGR) of 50% in terms of transaction volume. It predicts that the market will witness a substantial increase from 103 billion transactions in FY2022-23 to 411 billion transactions in FY2026-27.

Notably, the volume of UPI transactions are anticipated to rise from 83.71 billion in 2022-23 to 379 billion by 2026-27, reflecting the growing popularity and adoption of this payment method.

The report also highlights the significant revenue generated by the credit card business, accounting for approximately 76% of the overall revenue from cards in 2022-23. This makes the credit card segment an attractive and lucrative business segment for banks, non-banking financial companies (NBFCs), and fintech companies. Revenue from credit card issuance increased by 42% in 2022-23 compared to the previous year and is expected to grow at a CAGR of 33% over the next five years.

Over the next five years, credit card issuance is projected to grow at a CAGR of 21%, while debit card issuance is expected to experience stagnant growth at a CAGR of 3%. The decline in debit card usage can be attributed to the fact that cash withdrawals, which were a major use case for debit cards, can now be easily replaced by UPI-based cash withdrawals.

Experts mention that the country’s payments industry will focus on expanding ecosystems and exploring 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 will drive the next phase of growth in the payments industry. 

Overall, the Indian payments landscape is evolving rapidly, driven by technological advancements and changing consumer preferences. The future holds promising opportunities for expansion, innovation, and the creation of a seamless digital economy in India.

Source: Economic Times

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