UPI Transactions Anticipated to Represent 90% of all Retail Digital Payments by 2026-27

According to the analysis, UPI will continue to rule the retail digital payments environment, accounting for an astounding 90% of the total volume of transactions over the following five years. According to a PwC India analysis titled "The Indian Payments Handbook - 2022-27," Unified Payments Interface (UPI) transactions are anticipated to expand gradually and achieve a spectacular milestone of 1 billion daily transactions by 2026 to 2027. About 75% of all retail transaction volume in the period 2022–2023 was accounted for by UPI, which has played a significant role in India's digital payments revolution.

According to the analysis, UPI will continue to rule the retail digital payments scene

It generates an astonishing 90% of all transaction volume over the following five years. This forecast highlights the country's growing reliance on UPI as its preferred digital payment method. In terms of transaction volume, the Indian digital payments market has shown steady growth, with a compound annual growth rate (CAGR) of 50%. According to the research, this growth pattern is expected to continue, which projects that in FY 2026 to 27, there will be 411 billion transactions, up from 103 billion in FY 2022–23. In particular, it is predicted that the number of UPI transactions will significantly increase, from 83.71 billion in 2022–2023 to 379 billion in 2026–2027.

The research recognises the importance of the credit card segment

The study identifies the importance of the credit card segment, which continues to grow significantly even while UPI takes the lead. After UPI, card payments, including debit and credit cards, are widely used for digital retail prices. The analysis predicts a change in the relative dominance of credit and debit cards, with credit card transactions overtaking debit card transactions by the financial year 2024 to 2025. 

Credit card issuance is forecast to increase at a high CAGR of 21% over the next five years, while debit card issuance is anticipated to have stagnant growth with a CAGR of 3%. The decrease in debit card use is ascribed to the convenience of UPI-based cash withdrawal mechanisms, which may now easily replace cash withdrawal, the primary use case for debit cards.

In the upcoming years, the payments sector will prioritise ecosystem expansion

In the upcoming years, the payments sector will prioritise ecosystem expansion and creating new use cases for current payment platforms, according to Mihir Gandhi, Partner and Payments Transformation Leader at PwC India. The next phase of growth in the payments sector is anticipated to be driven by offline payments, embedded and ecosystem finance, digital loans based on payment transactions, and more. Innovation and inclusivity play critical roles in establishing the foundation for a smooth digital economy as the payments landscape in India continues to change.

The research provides insight into the credit card industry

The research also provides insight into the credit card industry, emphasising its considerable financial contribution to the care sector. A lucrative and appealing business category for banks, non-banking financial institutions (NBFCs), and fintech companies, the credit card segment contributed about 76% of the total cards' revenue in 2022–2023. Credit card issuance payments increased significantly in 2022–2023, by 42% over the prior year, and are anticipated to expand at a CAGR of 33% during the following five years.