Over the last five years, India’s digital payments ecosystem has grown exponentially. As a result of this extraordinary increase, non-cash digital payments will account for two out of every three payment transactions by 2026, with contributions from all around India.
According to a survey by PhonePe in cooperation with Boston Consulting Group, India’s digital payments sector is at a tipping point and is predicted to more than treble from its present $3 trillion by 2026. (BCG). Large B2B/G2B payments are excluded from this market.
According to the paper, as a result of this extraordinary development, non-cash digital payments would account for two out of every three payment transactions by 2026, with contributions from all around India.
Over the last five years, India’s digital payments ecosystem has grown exponentially.
Leading global and Indian fintech businesses have been important drivers of UPI growth among end users in India, boosted by merchants with user-friendly transaction interfaces and innovative offers backed by an open API environment.
The report also identifies the growth levers for digital payments in India, which include simplified customer onboarding, continued consumer awareness campaigns, merchants having greater access to credit, expanding merchant acceptance, infrastructure upgrades, and the establishment of a financial services marketplace to drive growth in underserved areas. It also discusses how IoT, 5G, and CBDC will offer further push to growth.
Commenting on the report, Karthik Raghupathy, head of strategy, and investor relations, PhonePe, said, “We have seen the growth of UPI over the last few years. Not surprisingly, UPI saw about nine times transaction volume increase in past three years, increasing from five billion transactions in FY19 to about 46 billion transactions in FY22: accounting for more than 60% non-cash transaction volumes in FY22.
According to Raghupathy, this demonstrates that digital payment has genuinely garnered widespread support throughout the country.
According to Raghupathy, this demonstrates that digital payment has genuinely garnered widespread support throughout the country.
According to Prateek Roongta, managing director and partner at Boston Consulting Group, India is on track to become a digital payment economy as the source of payments inverts, with 65 percent of transactions done digitally by 2026, up from 40 percent currently.
“Merchant payments will emerge as the most powerful driver of this growth, especially in the offline segment due to growing QR code deployments. We expect that merchant payments will soon outpace person-to-person fund transfers,” Roongta said.
