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India’s digital payment transactions are likely to expand more than three times in volume, from 159 billion transactions in FY 2023-24 to 481 billion by FY 2028-29, according to a report by PwC India. In terms of value of payment transactions, the market is expected to grow double, from Rs 265 trillion to Rs 593 trillion over the same period, the report said.
The report, released at the Global Fintech Fest here, said UPI registered a year-on-year growth in transaction volume of 57 per cent. In FY 2023–24, the total transaction volume was slightly over 131 billion and is expected to grow to 439 billion by FY 2028–29. UPI now accounts for over 80 per cent of the overall retail digital payments in India and is expected to contribute to 91 per cent by 2028-29.
Digital payments in India continue to surge, with a year-on-year (YoY) transactional volume growth of 42 per cent in FY 2023–24, which is poised to grow by three times in FY 2028–29, PwC said. “This growth can be attributed to multiple factors including innovations by ecosystem participants, new business models and opportunities, changing technology and increasing customer awareness,” it said.
Further, credit cards are expected to reach 200 million by FY 2028-29, PwC said. “Newer inventions, product propositions and customer segments are expected to contribute towards this growth,” it said.
Credit cards have witnessed a formidable growth in FY 2023-24 with the industry adding more than 16 million credit cards, crossing the well-anticipated milestone of 100 million cards in force. With the addition of new cards, the industry has also seen 22 per cent and 28 per cent surge in transactional volume and value respectively. Debit cards have seen a dip in both transactions volume and value owing to the shift in preferences by cardholders, PwC said.
The most significant expansion has been observed in UPI, which recorded more than 50 per cent growth.
Meanwhile, according to a BCG report, India’s financial technology (fintech) sector funding experienced a dip, falling 63 per cent to $ 0.7 billion in the first half of FY2024 as against $ 1.9 billion in the same periods of FY2023 and $ 3.1 billion in FY2022.
However, the report said Indian fintechs are on track to achieving $190 billion in revenue by 2030 and have demonstrated remarkable growth of 50 per cent in 2023
“Only two segments of increased funding observed namely, asset-based lending and retail banking and PFM. Equity funding in Indian fintechs has moderated over the past 4 quarters,” the BCG report released at the Global Fintech Fest in Mumbai.
“Funding will continue to remain selective and prudent in the short-medium term,” the BCG report said. Founders should also explore alternate sources of capital like private capital and venture debt, according to Neetu Chitkara, India Leader – fintech, Managing Director & Partner, BCG.
More than 60 per cent fintech founders see Generative AI and API-based open architecture as key drivers of future growth with applications ranging from customer service automation, marketing, and customer engagement to fraud detection, BCG said. Fintechs are increasingly exploring strategic international expansion with the Middle East and Southeast Asia top choices for Indian firms.
Addressing the summit, Infosys Chairman Nandan Nilekani said the ‘Finternet’ would empower people to participate in the upside of the economy and control all kinds of assets from user controlled to regulated and registered assets.
He introduced the Finternet, stating that, “Convergence of technology can unlock exponential value.”
“The Finternet combines the best of the regulated world with the best that tokenization technology can offer us. It uses the basic construct of tokens and then enables universal interoperability and composability,” he said.
200 mn women outside digital ecosystem: NPCI
A large part of the 200-million-women market segment currently operates outside the digital ecosystem but can still be included in existing UPI-based products and services, according to a report released by the National Payments Corporation of India (NPCI) and Women’s World Banking (WWB) at the Global Fintech Fest. “However, for this to happen, we need the participation of all ecosystem players to enable conditions that accelerate this adoption,” it said
The ‘UPI for Her’ initiative by NPCI and WWB has underscored the immense potential of India’s women’s market for digital payments, it said.