Indian digital payment industry is projected to reach $10 trillion by 2026, according to a report by digital payments company PhonePe, in collaboration with management consulting firm Boston Consulting Group.
India’s digital payments landscape has witnessed phenomenal growth over the past five years.
As per the report, India’s digital payments market is at an inflexion point and is expected to more than triple from the current $3 trillion to $10 trillion by 2026 (excluding large B2B/ G2B payments).
As a result of this unprecedented growth, digital payments (non-cash) will constitute 2 out of 3 payment transactions by 2026 with contributions from across India.
The report also talks about how the digital payments ecosystem has been positively disrupted by the entry of multiple new players with diverse offerings driving payments at scale, and niche players offering financial services such as credit, wealth management and insurance, according to a press statement.
Leading global and Indian Fintech players have been key drivers of UPI adoption in India among end users, aided by merchants with user-friendly transaction interfaces, and innovative offerings, supported by an open API ecosystem.
The report goes on to list the levers for the growth of digital payments in India which include - simplified customer onboarding, continued push for consumer awareness, merchants getting greater access to credit, expanding merchant acceptance, infrastructure upgrades and the setting up of a financial services marketplace driving growth in underpenetrated regions. It also talks about how IoT, 5G & CBDC will provide further impetus to growth.
Karthik Raghupathy, Head of Strategy, and Investor Relations, PhonePe, said, ‘’The report is an in-depth commentary on the growth of digital payments in India and looks at factors and enablers that will help unlock the massive growth potential going forward. This report is part of the PhonePe Pulse initiative, which was launched last year, in our effort to give back to the Fintech ecosystem.”
Prateek Roongta, Managing Director & Partner, Boston Consulting Group said, “India is set to become a digital payment economy as source of payments invert with 65 per cent transactions being done digitally by 2026, as opposed to 40 per cent transactions today. Merchant payments will emerge as the most powerful driver of this growth, especially in the offline segment due to growing QR code deployments. We expect that merchant payments will soon outpace person-to-person fund transfers.”