Upi, pay later, digital currency to generate payments in the years to come: Pwc India
Bombay : Although the local payment system’s Unified Payments Interface (UPI) will continue to drive digital payments in India, new avenues like buy now pay later (BNPL), digital currency, corporate payments and offline payments will shape the industry, according to a report from PwC India.
The report provides an overview of the current and future digital payments landscape and key factors influencing spending behavior and customer transactions in India. It also examines upcoming trends in the payments ecosystem like (BNPL), e-RUPI, Central Bank Digital Currency (CBDC) and offline payments, and how ecosystem players are likely to s adapt to these new payment trends.
Titled “The Indian Payments Handbook – 2021-26,” the report highlights that the domestic digital payments market grew at a compound annual growth rate (CAGR) of 23% in volume and is expected to reach 217 billion transactions over the course of the year. exercise 26.
“We expect the payments industry to focus heavily on improving the customer experience and providing payment options to customers, improving security, delivering technology innovations such as distributed ledger technology (DLT) and emerging technologies such as the Internet of Things (IoT) over the next couple of years,” said Mihir Gandhi, Partner and Head of Payments Transformation at PwC India.
UPI has contributed significantly to this growth, reaching a record 22 billion transactions in 2020-21, PwC said, adding that UPI transactions are expected to reach 169 billion by 2025-26, with a CAGR of 122% since 2018.
The report also defines some key trends that will contribute to the growth of the digital payments industry in India. He said the existing products will continue to make inroads and gain additional wallet share from Indian customers. Enabling new use cases across UPI, Fastag and Cards will continue to drive adoption and transaction count growth, he said.
That aside, the RBI has expanded the scope of tokenization to cover additional use cases such as laptops, desktops, wearables, Internet of Things (IoT) devices as well as tokenization by card on file (CoFT). PwC said in its report that in addition to improving card-related security, it will ensure that the overall payment experience for customers remains intact.
Offline payments would also contribute to the growth of digital payments in India. Poor connectivity and lack of access to online payment methods, according to the report, have opened an opportunity for offline payments. “Recent RBI guidelines on offline payments have given much needed boost to the segment,” he said.
Last month, the Reserve Bank of India (RBI) launched UPI for feature phones, attracting around 400 million feature phone users under its umbrella. Feature phones are basic phones, which usually provide voice calling and text messaging functionality.
Finally, the upcoming Central Bank Digital Currency (CBDC) could also be a game-changer, with the government announcing a rollout by RBI in FY23. of the current scenario, the CBDC will have to co-exist with the existing rails rather than replace them,” the report states.
Some of the major use cases of CBDC that are applicable in the Indian context are Programmable Direct Benefits Transfer (DBT), online and offline retail payments and cross-border remittances, he added. .