India’s Digital Payment Transactions to Triple by 2028-29: PwC Report

According to a recent report by PwC India, digital financial transactions in India are set to skyrocket over the next few years. The volume of these transactions is projected to increase from 159 billion in the fiscal year 2023-24 to a staggering 481 billion by 2028-29, marking a threefold growth. This surge is mirrored by an expected doubling in the value of digital payments, which will leap from Rs 265 trillion to Rs 593 trillion.

Key Drivers of Growth

The report, titled The Indian Payments Handbook 2024-29, highlights several factors fueling this rapid expansion. Key drivers include:

• Technological Innovation: Advances in technology are enhancing issuance and distribution strategies, enabling deeper penetration into the domestic market with various payment solutions.
• Government and Regulatory Support: Continued promotion and regulation by the government and financial regulators are facilitating this growth.
• Emerging Technologies: New technologies are improving user experience and strengthening measures to protect customers.

Unified Payments Interface (UPI) Leading the Charge

The Unified Payments Interface (UPI) is a major player in this transformation. UPI transactions are expected to grow at a rate of 57%, from 131 billion transactions currently to 439 billion by FY29. UPI now makes up over 80% of all retail digital payments in India, and this share is projected to rise to 91% by 2028-29.

Credit Cards Maintaining Strong Performance

Despite UPI’s dominance, credit cards continue to hold significant ground. In the fiscal year 2023-24, over 16 million new credit cards were issued, pushing the total number beyond 100 million. This growth has led to a 22% increase in transaction volume and a 28% rise in transaction value. By 2028-29, credit card transactions are expected to reach 200 million.

Debit Cards Experience Decline

Conversely, debit cards have seen a decline in both transaction volume and value. The number of debit card transactions fell from 3.94 billion in FY22 to 2.29 billion in FY24, and the transaction value decreased from Rs 7.3 trillion to Rs 5.9 trillion over the same period. This decline is attributed to a shift in consumer preferences towards other payment methods.

QR Codes on the Rise

QR codes are becoming increasingly popular, with infrastructure for merchant acquiring expanding in both large cities and smaller towns. The growth rate for QR codes was nearly 30% in 2023-24. Innovations like soundbox technology and cross-selling strategies have promoted their use among merchants. The Payments Infrastructure Development Fund (PIDF), introduced by the Reserve Bank of India, is also contributing to this growth by supporting the deployment of Point of Sale (PoS) infrastructure in smaller towns.

Future Outlook

Looking ahead, the payments industry is set to focus on expanding its ecosystem and exploring new use cases for existing platforms. Key areas of growth will include:

• Embedded Finance: Integrating financial services within other platforms.
• Ecosystem Finance: Creating comprehensive financial ecosystems.
• Digital Lending: Using payment data to drive digital lending solutions.
• Offline Payments: Enhancing payment options for offline transactions.

Mihir Gandhi, partner and payments transformation leader at PwC India, emphasized that these factors will be crucial in shaping the future of digital payments in India over the next five years.