UPI Set to Dominate Retail Digital Payments in India: A Billion Transactions Per Day by 2026-27

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The Indian digital payments landscape is poised for a significant shift as Unified Payments Interface (UPI) transactions are forecast to reach a staggering 1 billion per day by 2026-27, accounting for 90% of the country’s retail digital payments. This projection comes from a recent report by consulting firm PwC India, which provides a detailed analysis of the country’s evolving digital payments market.

Introduced in 2016, UPI has seen a meteoric rise in popularity and usage. The open-source API payment system, regulated by the Reserve Bank of India (RBI) and developed by the National Payments Corporation of India (NPCI), enables instant and hassle-free transactions. UPI connects banks, merchants, and consumers, providing a streamlined payment solution that has quickly become the preferred mode of digital payment in the country.In the fiscal year 2022-23, UPI accounted for approximately 75% of the total transaction volume in the retail segment. The PwC data indicates a compound annual growth rate (CAGR) of 234% in transactions and 196% in value since UPI’s launch. This growth is expected to continue, with UPI projected to dominate the retail digital payments landscape over the next five years.

The report also highlights the broader growth of the Indian digital payments market, which has seen steady growth at a CAGR of 50% volume-wise. The total transaction volume is anticipated to reach 411 billion transactions in FY 2026-27, up from 103 billion in FY 2022-23.Mihir Gandhi, Partner and Payments Transformation Leader at PwC India, emphasized the focus on ecosystem expansion and new use cases for existing payment platforms over the next five years. He noted that areas such as embedded and ecosystem finance, digital lending based on payment transactions, and offline payments would be instrumental in driving the next phase of growth for the payments industry.UPI’s success and adoption are not confined to India alone.

Already, 30 countries have expressed interest in adopting the UPI system. Singapore, Bhutan, and Nepal have already launched UPI, and from April 2023, it will facilitate remittances in 10 locations, including Australia, UAE, and Hong Kong. The system is also bringing about a change in rural India’s banking access due to the absence of intermediaries, low transaction costs, and the introduction of UPI features on feature phones without requiring an internet connection.

While UPI takes the lead, the report also sheds light on the growing significance of credit cards in India’s digital payments landscape. The credit card segment continues to see robust growth, challenging the traditional dominance of debit cards. Over the next five years, credit card issuance is projected to record a CAGR of 21%, even surpassing debit card transactions by FY 2024-2025.

The digital payents industry in India is on a trajectory of rapid growth and transformation. As UPI transactions continue to rise, the landscape of retail digital payments is expected to shift, marking a significant milestone in India’s journey towards a comprehensive digital economy.