Will India's UPI Transactions to Reach 1 Billion per Day by 2026-27?

The PwC report highlights that UPI, which has been instrumental in driving the digital payments revolution in India, accounted for approximately 75% of the total transaction volume in the retail segment during the fiscal year 2022-23

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According to a recent report by PwC India titled 'The Indian Payments Handbook – 2022-27,' the Unified Payments Interface (UPI) is expected to witness significant growth in the coming years. The report predicts that UPI transactions will reach 1 billion per day by the fiscal year 2026-27, accounting for 90% of retail digital payments in the country. This projection indicates the rapid pace of the adoption of digital payments and UPI's transformative impact on India's payment ecosystem.

UPI's Dominance in Retail Digital Payments:

The PwC report highlights that UPI, which has been instrumental in driving the digital payments revolution in India, accounted for approximately 75% of the total transaction volume in the retail segment during the fiscal year 2022-23. Over the next five years, UPI is projected to capture 90% of the total transaction volume in retail digital payments, further solidifying its dominance in the market. The exponential growth of UPI transactions is expected to facilitate a seamless digital economy in India.

Digital Payments Market Growth:

The report emphasizes that the Indian digital payments market has witnessed steady growth, with a compound annual growth rate (CAGR) of 50% in terms of transaction volume. It is estimated to reach 411 billion transactions in the fiscal year 2026-27, compared to 103 billion transactions in the fiscal year 2022-23. This remarkable growth can be attributed to the increasing adoption of digital payment platforms like UPI, which provide convenient and secure options for financial transactions.

Credit Cards' Continued Growth:

While UPI remains at the forefront of digital payments, the report acknowledges the steady growth of the credit card segment. Credit and debit cards are among the most widely used instruments for retail digital payments after UPI. The volume of credit card transactions is expected to surpass that of debit cards by the fiscal year 2024-25. The report highlights that credit card issuance is projected to grow at a healthy CAGR of 21% in the next five years, while debit card issuance is anticipated to experience stagnant growth with a CAGR of 3% during the same period.

Factors Influencing the Changing Landscape:

The decline in debit card usage can be attributed to the fact that debit cards were predominantly used for cash withdrawals, which can now be conveniently replaced by UPI-enabled cash withdrawals. The report underscores that the payments industry will focus on expanding the ecosystem and exploring new use cases for existing payment platforms over the next five years. Areas such as embedded and ecosystem finance, digital lending based on payment transactions, and offline payments are expected to drive the industry's future growth.

Global Adoption of UPI:

There has been widespread interest from other countries in adopting India's Unified Payments Interface (UPI) for digital payments. Approximately 35-40 countries, including Japan, Bhutan, Malaysia, UAE, Nepal, France, UK, Russia, Oman, Qatar, Australia, Thailand, Saudi Arabia, Singapore, Vietnam, Cambodia, South Korea, and Bahrain, among others, are in talks with India regarding UPI adoption. This global recognition further reinforces UPI's credibility and positions India as a leader in real-time transactions. A top government official told News18 that “35-40 countries” are now considering adopting UPI, with India being actively engaged with them on the issue.

RBI's Payment Vision:

The RBI's fiscal year 2022-23 annual report sheds light on the central bank's commitment to enhancing India's payment systems and promoting financial inclusion. The report highlights the release of the Payments Vision 2025, which aims to empower every user with safe, secure, reliable, accessible, affordable, and efficient payment options. The RBI introduced several new streams in payment systems to enrich functionalities and onboard more consumers on the digital journey.

One notable addition is the introduction of UPI Lite, which facilitates small-value transactions in offline mode using UPI through an on-device wallet. This innovation enables users to make seamless UPI transactions even in areas with limited internet connectivity. Additionally, the RBI permitted linking RuPay credit cards to UPI, expanding the usage of UPI by broadening the range of financial products linked for payment processing. The introduction of single block multiple debits in UPI further enhanced the capabilities for merchant payments, providing convenience and efficiency for businesses.