UPI to dominate digital payments space

A study by PwC India said that online transaction platform Unified Payments Interface (UPI) will likely continue to dominate the digital payments space in the country even as newer methods such as Buy Now Pay Later (BNPL) and digital currency are expected to define the future of payments.

The report said that UPI is expected to continue to be the major contributor in the digital payments space, followed by BNPL. In 2020-21, UPI transactions reached a record 22 billion and it is expected to reach 169 billion by 2025-26, growing at a CAGR of 122 percent.

The report highlighted that existing products and emerging use cases such as UPI, Fastag, transit (NCMC) and cards will continue to make advancements and gain additional wallet share of the Indian customers.

According to the report, the Indian digital payments market saw steady growth at a CAGR of 23 percent, and is expected to reach 217 billion transactions in FY26 from 59 billion in FY22. The report also claimed UPI, BNPL, Central Bank Digital Currency (CBDC) and offline payments will drive growth of digital payments in India in the next five years.

Mihir Gandhi, Partner & Payments Transformation Leader, PwC India, said, “We expect the payments industry to focus heavily on enhancing customer experience and providing customer options for payment, enhancing security, undertaking innovations in technology like distributed ledger technology (DLT) and emerging tech like IoT over the next couple of years. With the efforts and initiatives of key stakeholders such as regulators, banks, payment/fintech companies, card networks and service providers, the industry is going to see tremendous growth in the coming years.”