Cash Use Declines; India’s UPI e-Com Market To Reach $150 Billion By 2026
With UPI transactions on the upsurge, India's e-commerce market is projected to grow from $83 billion in 2022 to $150 billion in 2026
NEW DELHI: Apps are in and cash is out- this is the trend that is forecast to reign in India's financial markets in the very near future.
With unified payments interface (UPI)-based transactions continuing to break all records and cash transactions declining further, India's e-commerce market is projected to grow from $83 billion in 2022 to $150 billion in 2026, according to a report released on Thursday.
As of January 2023, UPI recorded the biggest year-on-year growth of 74.1 per cent in transaction volume while digital wallets grew from 5 per cent in 2019 to 35 per cent of POS value in 2022 stimulated by UPI. The amazing findings were brought to light in the '2023 Global Payments Report' by global financial technology leader FIS.
Even as cash use declined from 71 per cent of POS transaction value in 2019 to just 27 per cent in 2022, India has jumped to the fore as a global leader in payments with the development of its next-generation real-time payments (RTP) infrastructure.
According to the findings, UPI has helped e-commerce account-to-account (A2A) payments grow to $12 billion, a growth of 53 per cent within just one year, from 2021 to 2022.
Phil Pomford, General Manager APAC, Worldpay Merchant Solutions at FIS said, "UPI is driving consumers away from cash and helping to drive financial inclusion all at the same time, and is making India a leader in payments across not just the region, but the globe."
The development of real-time payment schemes by other central banks and, most importantly, the cooperation between those central banks, is also helping scale up cross-border commerce. This is now providing merchants with a significant opportunity for growth moving forward, Pomford added.
Although cash is still there, increasingly a majority of peer to peer transactions are done through UPI.
Going by the same set of data, cash transaction is expected to decline by 34 per cent in transaction value by 2026. On the other hand, digital wallets are expected to rise in transaction value by 88 per cent by 2026.
In the online space, the ecommerce market size is expected to grow by 82 per cent through 2026, providing a greater boost to digital payments.
Earlier this month, Reserve Bank of India (RBI) governor Shaktikanta Das said that payments through UPI grew exponentially in the past 12 months, with daily transactions crossing Rs 36 crore, up from Rs 24 crore in February 2022. Taken in value terms, these transactions would be worth Rs 6.27 lakh crore.
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