 "Digital transaction")
On the other hand, debit cards have seen a dip in both transaction volume and value due to a shift in preferences by cardholders | Photo: Shutterstock
The number of digital transactions in India is expected to increase more than threefold, from 159 billion transactions in 2023-24 to 481 billion by 2028-29, according to a report by PwC India.
In terms of the value of payment transactions, the market is expected to more than double, from Rs 265 trillion to Rs 593 trillion over the same period, the consultancy said in its report, “The Indian Payments Handbook 2024-29,” released on Wednesday.
This growth can be attributed to innovations by ecosystem participants, new business models and opportunities, changing technologies, and increasing customer awareness.
“The innovation in technology spans issuance and distribution strategies to penetrate deeper into the domestic market for various payment solutions, promotion and regulation by the Government and regulators, and the emergence of innovative technologies to enhance user experience and risk measures to safeguard customers,” the report said.
The United Payments Interface (UPI) currently has a transaction volume growth trajectory of 57 per cent. From 131 billion transactions currently, the number of UPI transactions is likely to jump to 439 billion by FY29, it added.
Today, UPI accounts for over 80 per cent of overall retail digital payments in India and is expected to contribute 91 per cent by 2028-29.
Credit cards have continued to hold ground amid the rise of UPI. They have witnessed growth in 2023-24, with the industry adding more than 16 million credit cards, crossing the milestone of 100 million cards in force.
“With the addition of new cards, the industry has also seen a 22 per cent and 28 per cent surge in transaction volume and value, respectively,” the report said, adding that credit card transactions are expected to reach 200 million by 2028-29.
On the other hand, debit cards have seen a dip in both transaction volume and value due to a shift in preferences by cardholders.
From 3.94 billion in FY22, the debit card volume has fallen to 2.29 billion in FY24. The value has decreased from Rs 7.3 trillion in FY22 to Rs 5.9 trillion in FY24.
For QR codes, 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, tier-3, and tier-4 cities.
The year-on-year growth of QR codes is nearly 30 per cent in 2023-24.
“Innovations in this space, such as soundbox, cross-sells to merchants, and innovative activation strategies, have also promoted the use of digital payments by merchants,” the report said.
“Additionally, efforts to promote via the Payments Infrastructure Development Fund (PIDF) have accelerated the growth of the payments infrastructure in the country,” it added. This fund was introduced by the Reserve Bank of India to encourage the deployment of Point of Sale (PoS) infrastructure across tier-3 to tier-6 centres (cities and towns) in the country.
Mihir Gandhi, partner and payments transformation leader at PwC India, said, “Over the next five years, the payments industry will prioritise expanding ecosystems and exploring new use cases for existing platforms. Key growth drivers will include embedded finance, ecosystem finance, digital lending based on payment data, and offline payments.”
First Published: Aug 28 2024 | 2:16 PM IST
