A recent report by PwC India titled “The Indian Payments Handbook – 2022-27” reveals that Unified Payments Interface (UPI) transactions in India are projected to reach a remarkable milestone of 1 billion transactions per day by 2026-27. UPI, which has been instrumental in driving the digital payments revolution in the country, accounted for approximately 75 percent of the total transaction volume in the retail segment during the period of 2022-23. The report highlights the continuous dominance of UPI in the retail digital payments landscape, projecting it to account for an impressive 90 percent of the total transaction volume over the next five years. This projection signifies the increasing adoption and reliance on UPI as the preferred mode of digital payment in India.
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 growth trajectory will continue, with the number of transactions expected to surge from 103 billion in FY 2022-23 to a staggering 411 billion in FY 2026-27. Specifically, UPI transactions are estimated to experience a substantial rise from 83.71 billion in 2022-23 to 379 billion transactions by 2026-27. While UPI takes the lead, the report also recognizes the significance of the credit card segment, which continues to experience robust growth.
Card payments, including both debit and credit cards, remain popular instruments for retail digital payments after UPI. However, the report foresees a shift in dominance between debit and credit cards, with credit card transactions expected to surpass debit card transactions by FY 2024-2025. Over the next five years, credit card issuance is projected to grow at a healthy CAGR of 21 percent, while debit card issuance is anticipated to have stagnant growth with a CAGR of 3 percent. The decline in debit card usage can be attributed to the convenience of UPI-based cash withdrawal methods, which have replaced the primary use case of debit cards, i.e., cash withdrawal.