India's e-commerce market is projected to grow from $83 billion in 2022 to $150 billion in 2026, as cash transactions continue to decline and unified payments interface (UPI)-based transactions keep breaking records, a report by global financial technology leader FIS shows.
The '2023 Global Payments Report' noted that UPI marked a record year, with the biggest year-on-year growth of 74.1% in transaction volume as of January 2023. Additionally, digital wallets grew from 5% in 2019 to 35% of the point of sale (POS) value in 2022, primarily due to the influence of UPI.
India emerged as a global leader in payments due to the development of its next-generation real-time payments (RTP) infrastructure, as cash use declined from 71% of POS transaction value in 2019 to just 27% in 2022.
The report also noted that UPI played a key role in the growth of e-commerce account-to-account (A2A) payments to $12 billion, up 53% from 2021 to 2022, the findings showed.
Finally, the report predicts that cash transactions will decline by 34% in transaction value by 2026, while digital wallets are expected to rise in transaction value by 88% by 2026. In the online space, the e-commerce market size is expected to grow by 82% by 2026, providing a significant boost to digital payments.
This is a result of the development of real-time payment schemes by the central banks, and the cooperation between those central banks which is helping to fuel cross-border commerce, and providing merchants with significant growth opportunities. This development is significant because it presents a massive opportunity for merchants to expand their businesses.
Earlier this month, the Reserve Bank of India (RBI) governor Shaktikanta Das announced that payments through UPI grew exponentially in the past 12 months, with daily transactions crossing 36 crore, up from 24 crore in February 2022. In value terms, these transactions were worth Rs 6.27 lakh crore.