India’s digital payments industry is experiencing an unprecedented surge, with transaction volumes growing by 42% year-over-year (YoY) in FY24, according to a recent PwC report. This remarkable growth trajectory is set to continue, with transaction volumes projected to increase from 159 billion in FY24 to an astounding 481 billion by FY29. Concurrently, the market value of India’s digital payments sector is anticipated to nearly double during this period, expanding from US$ 3.16 trillion (Rs. 265 trillion) to US$ 7.06 trillion (Rs. 593 trillion) by FY29.

At the forefront of this digital payments revolution is the Unified Payments Interface (UPI), which continues to lead the way with remarkable growth. UPI transactions grew by 57% YoY in FY24, surpassing 131 billion transactions. Looking ahead, UPI transactions are expected to reach 439 billion by FY29, representing a staggering 91% of India’s retail digital payment transactions. In FY23 alone, UPI accounted for over 75% of the total transaction volume, with UPI transactions valued at US$ 2.38 trillion (Rs. 199.9 trillion). The report predicts that daily UPI transactions could hit 1 billion by FY28 and potentially soar to 1.4 billion by the end of FY29.

The continued dominance of UPI is driving a decline in the use of debit cards, both in terms of transaction volume and value. Consumers are increasingly favoring UPI due to its convenience and efficiency. This shift is being further supported by the expansion of digital payment infrastructure, including innovations such as QR codes, soundboxes, and merchant cross-selling strategies. These advancements are particularly driving adoption in Tier 2, 3, and 4 cities, where digital payments are becoming more accessible and prevalent.

The growth of India's digital payments sector reflects a broader trend towards increased financial inclusion and technological innovation. The expansion of UPI and other digital payment methods is enabling a more streamlined and secure financial ecosystem, enhancing convenience for consumers and businesses alike.

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