Digital payment industry in India projected to reach $10 tn by 2026

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India’s digital payments landscape has witnessed phenomenal growth over the past five years. As per a report titled, “Digital payments in India: A $10 trillion opportunity”, India’s digital payments market is at an inflection point and is expected to more than triple from the current $3 trillion to $10 trillion by 2026 (excluding large B2B/ G2B payments). As a result of this unprecedented growth, digital payments (non-cash) will constitute 2 out of 3 payment transactions by 2026 with contributions from across India.

The report predicts that India will become a digital payment economy, and merchant payments will emerge as the most powerful driver of this growth, especially in the offline segment due to growing QR code deployments. Leading global and Indian fintech players have been the key drivers of UPI adoption in India among end users, aided by merchants with user-friendly transaction interfaces and innovative offerings.

Multiple factors have contributed towards the growth of digital payments in India: 

  • UPI system has supercharged India’s transition to non-cash payments, especially in person-to-person (P2P) fund transfers and low value merchant (P2M) payments.
  • UPI saw about nine times transaction volume increase in the past three years, from five billion transactions in FY2019 to about 46 billion transactions in FY2022, accounting for more than 60 per cent of non-cash transaction volumes in FY22.
  • The online payment ecosystem has been led by an open and inter-operable architecture with direct payments linked to a bank account, without the need to top up wallets.

As per the report, in the future, digital payments will be driven by factors such as expanding merchant acceptance, infrastructure push and setting up of a financial services marketplace driving growth in underpenetrated regions, digitised value chains increasing digital payment adoption and IoT, 5G and CBDC (Central Bank Digital Currency) lending further impetus.

 

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