A recent report has noted that digital payments in India are surging with a year-on-year (YoY) transactional volume growth of 42% in FY 2023–24. This growth is poised to multiply by three times in FY 2028–29 duet to multiple factors, such as innovations by ecosystem participants, new business models and opportunities, changing technology and increasing customer awareness, PwC India said in its report — The Indian Payments Handbook 2024-29.
For UPI, the report said that the interface will continue its remarkable growth trajectory with a YoY growth in transaction volume of 57%.
“In FY 2023–24, the total transaction volume was slightly over 131 billion and is expected to grow to 439 billion by FY 2028–29. UPI now accounts for over 80% of the overall retail digital payments in India and is expected to contribute to 91% by 2028-29,” the report said.
It further said Merchant acquiring solutions – including offline and online options like QRs, payment aggregators and payment gateways – also saw substantial growth of more than 25% due to regulatory push, high QR penetration and inclusion of new players.
Additionally, the use of credit cards grew by approximately 20% due to increased demand from Gen-Zs and population in Tier II and below locations. Bharat Bill Payments Solution (BBPS) has witnessed a growth of 25%, largely driven by addition of new billers and increased payment options for customers by virtue of third-party application provider (TPAPs).
The National Electronic Toll Collection (NETC) – due to continued adoption of toll tags for new vehicles – has grown by more than 10%. The surge in digital payments in India is also a resultant of the developing start-ups ecosystem in India which are creating innovative solutions that cater to diverse customer needs.
The report further noted the popularity of Indian payment products is increasing considerably, driven by new industry use cases, increased participation from banks, non-banking financial companies (NBFCs), and FinTech companies, seamless integration with digital ecosystems and marketplaces, and advanced security features.
Both consumers and businesses are increasingly preferring these products for their ease of use, reliability, efficiency and cost-effectiveness.
Additionally, the regulatory initiatives to promote digital payments and financial inclusion have created a conducive environment for innovation, expansion and adoption.
Credit cards
The report noted credit cards have witnessed a formidable growth in FY 2023-24 with the industry adding more than 16 million credit cards, crossing the well-anticipated milestone of 100 million cards in force. With the addition of new cards, the industry has also seen 22% and 28% surge in transactional volume
and value respectively.
Debit cards have seen a dip in both transactions volume and value owing to the shift in preferences by cardholders. Credit cards are expected to reach 200 million by FY 2028-29. Newer inventions, product propositions and customer segments are expected to contribute towards this growth.
The infrastructure for merchant acquiring, both online and offline, has been expanding not only in metros and tier 1 cities but also in tier 2, 3, and 4 cities. The YoY growth of QR codes is nearly 30%+ and 17%+, respectively, in FY 2023–24.
Innovations in this space, like soundbox, cross-sells to merchants and innovative activation strategies, have also promoted the use of digital payments
by merchants. Also, efforts to promote via the Payments Infrastructure Development Fund (PIDF) have accelerated the growth of the payments infrastructure in the country.
In addition to the consumer payments, this edition covers the use cases and future of business payments through digital channels, including cross-border transfers. Emergence of new FinTech players and their partnerships with well-established issuers may prove to be pivotal for business
and commercial payments.