The National Payments Corporation of India (NPCI) announced a significant milestone for the Unified Payments Interface (UPI), as it keyed-in a record-breaking 9 billion transactions in May. This article delves into the latest achievements of UPI, its projected growth, and the evolving landscape of digital payments in India.
UPI’s Phenomenal Growth:
The NPCI, the governing body for retail payments and settlement systems in India, reported the exceptional performance of UPI, hailing it as a major success in real-time mobile payments. With over 9 billion transactions in May, UPI continues to offer seamless and convenient payment options to users across the country.
Projected Future Growth:
According to a report by PwC India titled “The Indian Payments Handbook – 2022-27,” UPI transactions are expected to reach an astonishing 1 billion per day by 2026-27. This projection accounts for approximately 90 percent of all retail digital payments in India, underscoring the pivotal role UPI is expected to play in the country’s digital payment ecosystem.
UPI’s Dominance in Retail Segment:
The PwC report also highlighted UPI’s prominence in the retail segment, stating that it accounted for around 75 percent of the total transaction volume in 2022-23. As UPI continues to gain popularity, it is driving the growth of the Indian digital payments market, which is projected to reach a staggering 411 billion transactions in FY 2026-27, up from 103 billion in FY 2022-23.
Shifting Dynamics in Card Payments:
While UPI remains at the forefront of digital payments, the PwC report indicated evolving dynamics in the card payments space. The credit card segment is experiencing robust growth and is set to surpass debit cards in terms of transaction volume by FY 2024-2025. The report attributes this shift to the ease of cash withdrawal using UPI, which has traditionally been a primary use case for debit cards.
Lucrative Credit Card Business:
The report further revealed that revenue generated through the credit card business constituted a substantial 76 percent of the overall cards’ revenue in 2022-23. This highlights the lucrative nature of the credit card segment, attracting the attention of banks, non-banking financial companies (NBFCs), and fintech firms.
The Unified Payments Interface (UPI) in India continues to break records, reaching a new milestone of 9 billion transactions in May. With UPI projected to handle 1 billion transactions per day by 2026-27, it is poised to become the dominant player in the country’s digital payment landscape. As the dynamics between card and UPI payments shift, credit cards are gaining prominence, presenting an opportunity for financial institutions to tap into a lucrative business segment. The steady growth of digital payments in India signifies the nation’s embrace of modern and convenient payment methods, transforming the way individuals and businesses transact in the digital era.
