India@75: Growth drivers for digital payments revolution

Today, 2 out of every 5 transactions done in India, excluding large corporate transactions, are done digitally. It is estimated that by 2026 this will go up to 2 out of every 3 transactions.

A BCG-PhonePe study estimates that India’s digital payment market which is currently at about $3 trillion will more than triple by 2026.

In volume terms, India’s digital payments more than doubled from 25 billion in FY20 to 63 billion in FY22 and is expected to cross 214 billion by FY26.

The JAM trinity, which is a combination of bank account penetration through the Jan Dhan Yojana programme, Aadhaar based KYC and mobile devices with low-cost internet access, have acted as the foundation for the relentless growth of digital payments in the country.

The real hero of the digital payment story is UPI or Unified Payments Interface. UPI, which is now in its sixth year, has supercharged India’s transition to non-cash payments growing about 200 percent over the last 5 years. UPI already accounts for more than 60 percent of all non-cash transaction volumes and that number is expected to go up to 75 percent in the next few years.

However despite this rapid growth, India has the highest share of people with inactive accounts, which is as high as 35 percent. World Bank Findex shows that 70 percent of account owners in India have not used their payment cards, mobile phone or internet to make digital payments.

CNBC-TV18 spoke to Praveena Rai, COO of NPCI; Sameer Shetty, President & Head of Digital Business at Axis Bank; Mohit Gopal, COO at PayU India; and Deeksha Kaushal, Director of Financial Services at Google Pay, to discuss the growth drivers for digital payments in India.