Upi: UPI to cover 90% of retail digital payments in India by 2026-27: Report

Unified Payments Interface (UPI) has been driving the digital payments revolution in India. According to a PwC report titled “The Indian Payments Handbook – 2022-27”, 75% of total transaction volume in the retail segment in 2022-23 was done using UPI. The report also claims that UPI transactions are growing at a steady pace and may reach 1 billion per day by 2026-27. As per the report, UPI is projected to account for 90% of the total transaction volume in retail digital payments over the next five years.
How the Indian digital payments market is expected to evolve
The report claims that the Indian digital payments market saw 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. “It is estimated that UPI will record 1 billion transactions per day by FY2026-2027, going from 83.71 billion transactions in 2022-23 to 379 billion transactions by 2026-27,” the report added.
The report also shows that the credit card segment continues to grow at a healthy rate. After UPI, card payment (both debit and credit) is one of the most used instruments for retail digital payments. The report claims that credit card transactions’ volume is expected to surpass debit cards by FY 2024-2025.
In the next five years, credit card issuance is also expected to grow at a CAGR of 21% while debit card issuance is likely to see a stagnant growth with a CAGR of 3%. “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 added.
Mihir Gandhi, Partner and Payments Transformation Leader, PwC India, has said that in the next five years, the payments industry is likely to focus on ecosystem expansion and new use cases for existing payment platforms.

“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,” Gandhi noted.
The report also mentioned that in 2022-2023, revenue through the credit card business accounts for nearly 76% of the overall cards’ revenue. This makes credit cards a viable business segment for banks, NBFCs and FinTech.
In 2022-2023, the revenue for credit card issuance increased by 42% compared to 2021-2022. The report adds that it is expected to grow by a CAGR of 33% in the next five years.

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