India is propelling itself into a new era of financial transactions as the county's appetite for digital transactions continues to grow.

According to a report by PwC India, the Unified Payments Interface (UPI) is set to reach mind-boggling heights, with a projected one billion transactions per day by the financial year 2026-2027. That's a staggering 90% of all retail digital payments in the country! Already accounting for 75% of the retail transaction volume in 2022-2023, UPI is showing no signs of slowing down.

But that's not all. The Indian digital payments market as a whole is on an upward trajectory, growing at an impressive compound annual growth rate (CAGR) of 50%. By the financial year 2026-2027, it is expected to reach a whopping 411 billion in transactions, compared to a modest 103 billion in 2022-2023.

📊 UPI transactions in India reached a record high of 7.82B in Dec. 2022, valued at $174B
India’s flagship payment platform, Unified Payments Interface (UPI), ended the year on a high note with a record 7.82 billion transactions in December, worth a record Rs 12.82 trillion ($174.6 billion). Data from the National Payments Corporation of India (NPCI) shows that this is a 7.12%

While UPI steals the spotlight, credit cards are still holding their ground as one of the most popular instruments for retail digital payments. In fact, the report predicts that credit card transactions will surpass debit card transactions by the financial year 2024-2025, showcasing the growing preference for plastic powerhouses.

Generating a staggering 76% of the overall revenue from cards in 2022-2023, credit cards are proving to be a lucrative business segment for banks, non-banking financial companies (NBFCs), and FinTech firms. No wonder the revenue from credit card issuance increased by a remarkable 42% in 2022-2023 compared to the previous year, with a projected compound annual growth rate of 33% for the next five years.

UPI projected to fuel India’s e-commerce market to $150 billion by 2026
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On the other hand, debit card usage is expected to decline due to the rise of UPI. Withdrawing cash has been a significant use case for debit cards, but now, the convenience of UPI's cash withdrawal feature is replacing the need for physical cards. Consequently, debit card issuance is projected to have stagnant growth with a lacklustre compound annual growth rate of 3% in the coming years.

Looking ahead, the report highlights that the payments industry will focus on expanding the ecosystem and exploring new use cases for existing payment platforms. Embedded and ecosystem finance, digital lending based on payment transactions, and offline payments are expected to drive the next phase of growth, paving the way for a seamless digital economy.