India’s e-commerce market is projected to grow from $83 billion in 2022 to $150 billion in 2026, according to FIS 2023 Global Payments Report.

The report added that cash use declined from 71 per cent of POS transaction value in 2019 to just 27 per cent in 2022. The Unified Payments Interface (UPI) has helped e-commerce account-to-account (A2A) payments grow to $12 billion, which is up 53 per cent between 2021 and 2022, and digital wallets have also grown from 5 per cent to 35 per cent of POS value. The Global Payments Report also shows that by 2026 A2A transaction value is expected to grow by 195 per cent to $36 billion.

UPI has almost become the default payment option in India. While cash is still there, increasingly, a majority of peer-to-peer transactions are done through the platform. According to the data released by FIS, cash is expected to decline by 34 per cent in transaction value by 2026, and digital wallets are expected to rise in transaction value by 88 per cent by 2026. In the online space, the e-commerce market size is expected to grow by 82 per cent by 2026, providing a greater boost to digital payments.

UPI grew 427 per cent in transaction volume between March 2020 and August 2022. Its seamless interoperability with commercial wallets such as Google Pay, Paytm and PhonePe has helped digital wallets grow from 5 per cent POS market share in 2019 to 35 per cent in 2022. UPI’s volume is continuing to show tremendous growth, increasing from 2.2 billion transactions in December 2020 to 4.5 billion in December 2021, and to 7.8 billion in December 2022. As of January 2023, the number of banks live on UPI has increased to 385, and this number is expected to rise in the upcoming years. 

Phil Pomford, General Manager APAC, Worldpay Merchant Solutions at FIS, said: “The success of UPI in India is changing consumers payment preferences faster than anyone could have predicted. UPI gives consumers the ability to transfer funds easily and instantly, 24/7, free of charge, from one bank account to another, and its success shows consumers want more choice, convenience and control at the checkout. It 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, critically, the cooperation between those central banks – is also helping to fuel cross-border commerce, providing merchants with a significant opportunity for growth, moving forward.”