BENGALURU: Of every three payment transactions, two will be non-cash or digital by 2026, and UPI (Unified Payments Interface) has supercharged the target of India’s transition to non-cash payments, according to a report. Currently, two out of five transactions are non-cash.
The report by digital payments major PhonePe and Boston Consulting Group (BCG) says the value of digital payments will jump three-fold from the present $3 trillion to $10 trillion by 2026, and digital payments will constitute nearly 65% of all payments in another four years.
According to the National Payments Corporation of India (NPCI), UPI processed Rs 10 lakh crore worth of transactions in May alone, and for FY22, the platform processed transactions of Rs 83.45 lakh crore. UPI transactions are at approximately 9x of credit and debit card transactions in volume terms in FY22.
Over the past five years, the country’s digital payments have witnessed a significant growth and according to the report, the country’s digital payments market is at an inflection point. The report also highlights that UPI saw about a 9x transaction volume increase in the past three years, increasing from 5 billion transactions in FY19 to about 46 billion transactions in FY22; accounting for more than 60% of non-cash transaction volumes in FY22.
The major contribution for the digital payments’ growth is from merchant payments, and fintech players have been key drivers of UPI adoption in India. However, the report points out that Tier 3 cities remain underpenetrated, with significant scope for growth.