Digital transactions in India to grow threefold by 2028-29: Report

UPI, credit cards, QR codes adoption increasing but debit cards may be losing their sheen

Digital financial transactions will increase from 159 billion in 2023-24 to 481 billion by 2028-29 to mark a threefold growth, according to a report by PwC India.

The value of digital payments will double: From Rs 265 trillion to Rs 593 trillion, said the consultancy in its ‘The Indian Payments Handbook 2024-29’ on Wednesday.

"The innovation in technology spreads over issuance and distribution strategies to penetrate deeper in the domestic market for various payments 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 Unified Payments Interface (UPI) has a transaction volume growth trajectory of 57 per cent. From 131 billion now, the number of UPI transactions is likely to jump to 439 billion by FY29, it added.

UPI comprises more than 80 per cent of the overall retail digital payments in India and is expected to contribute to 91 per cent by 2028-29.

Credit cards have continued to hold ground amid the rise of UPI. The industry added more than 16 million credit cards in 2023-24, crossing the 100-million mark.

"With the addition of new cards, the industry has also seen a 22 per cent and 28 per cent surge in transactional 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 owing to the 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 fallen 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, 3, and 4 cities.

The year-on-year growth of QR codes is nearly 30 per cent in 2023–24.

"Innovations in this space, like soundbox, cross-sells to merchants and innovative activation strategies, have also promoted the use of digital payments by merchants," the report said.

"Also, 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-III to Tier-VI centres (cities and towns) in the country.

"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," said Mihir Gandhi, partner and payments transformation leader at PwC India.