India has emerged as a global leader in payments, thanks to its next-generation real-time payments (RTP) infrastructure, the Unified Payments Interface (UPI), according to a new report from FIS, a global financial technology leader, that examines payment trends in 40 global markets.

The report, titled Worldpay from FIS Global Payments Report 2023 shows that cash use in India has declined rapidly, from 71 percent of POS transaction value in 2019 to just 27 percent in 2022. Meanwhile, e-commerce account-to-account (A2A) payments have grown to $12 billion, up 53 percent from 2021 to 2022, and digital wallets' growth has increased from five percent to 35 percent of POS value.

In 2022, there were nearly 70 real-time payment schemes that provided high-speed payment rails, driving A2A payments to account for $525 billion in global e-commerce transaction value, up 13 percent from $463 billion in 2021.

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UPI has become India’s leading digital payments platform, growing at an enormous rate of 427 percent in transaction volume between March 2020 and August 2022. Its interoperability with commercial wallets such as Google Pay, Paytm, and PhonePe has helped digital wallets grow from a five percent POS market share in 2019 to 35 percent in 2022. The volume of UPI transactions has continued to show tremendous growth, increasing from 2.2 billion transactions in December 2020 to 7.8 billion in December 2022.

Cash is projected to decline even further by 2026, representing just 14 percent of POS market share, while digital wallets are expected to rise in transaction value by 88 percent by 2026. A2A transaction value is expected to grow by 195 percent to $36 billion by 2026.

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 is driving consumers away from cash and helping to drive financial inclusion all at the same time, making India a leader in payments across not just the region, but the globe."

India’s e-commerce market is projected to grow from $83 billion in 2022 to $150 billion in 2026, providing a boost to digital payments. The development of real-time payment schemes by other central banks is also helping to fuel cross-border commerce, providing merchants with significant opportunities for growth in the future.

Also Read: India launches UPI integration with Singapore's PayNow

In an interview to CNBC-TV18, Harish Prasad, Head of Banking in India at FIS said, "The account to account payments is what is hitting cash significantly. The infiltration of UPI into the rural markets we believe will continue and continue pretty strongly and that will impact cash usage as well. So, we expect rural offtake of UPI to increase which will drive further reduction in use of cash over a period of time."

First Published:Mar 23, 2023 9:11 PM IST