PwC India has released a report which highlights that UPI is projected to dominate retail digital payments in India, accounting for 90% of transactions until 2027. Unified Payments Interface (UPI) transactions are expected to continue growing steadily, reaching a milestone of 1 billion transactions per day by 2026-2027, according to a report by PwC India titled ‘The Indian Payments Handbook – 2022-27.’ 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 period of 2022-2023.

More Indians are expected to adopt UPI The report highlights that UPI is projected to dominate the retail digital payments landscape even further, accounting for an impressive 90% of the total transaction volume until 2027. This projection underscores the increasing adoption and reliance on UPI as the preferred mode of digital payment in the country. The Indian digital payments market has witnessed consistent growth, with a compounded annual growth rate (CAGR) of 50% in terms of transaction volume.

The report predicts that this growth trajectory will continue, projecting the number of transactions to surge from 103 billion in FY 2022-2023 to 411 billion in FY 2026-27. Specifically, it is estimated that UPI transactions will experience a substantial rise from 83.71 billion in 2022-23 to 379 billion transactions by 2026-2027. Credit cards to take over debit cards While UPI takes the lead, the report also acknowledges 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. Until 2027, credit card issuance is projected to grow at a CAGR of 21%, whereas debit card issuance is anticipated to have stagnant growth with a CAGR of 3%.

The decline in debit card usage is attributed to the fact that cash withdrawal, which has been a primary use case for debit cards, can now be conveniently replaced by UPI-based cash withdrawal methods. The report also sheds light on the credit card business, highlighting its significant revenue contribution to the overall card market. In 2022-2023, revenue generated through the credit card segment accounted for nearly 76% of the total cards' revenue, making it an attractive and lucrative business segment for banks, non-banking financial companies (NBFCs), and fintech companies.

The revenue from credit card issuance witnessed a substantial increase of 42% in 2022-2023 compared to the previous year and is projected to grow at a CAGR of 33% until 2027. Payments to become more and more digital Officials from PwC India emphasised that the payments industry will focus on ecosystem expansion and the development of 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 are expected to drive the next phase of growth in the payments industry.

As the Indian payments landscape continues to evolve, innovation and inclusion are playing crucial roles in paving the way for a seamless digital economy. .