A recent industry report noted that UPI is projected to clock 30 per cent to 35 per cent growth in transaction value by FY26. Of this, online food delivery and e-commerce are already witnessing over 60 per cent use of UPI as a preferred payment mode.

Redseer Strategy Consultants released the ‘Future of Online Payments’ report in collaboration with Plural by Pine Labs. It highlights growth projections for the forecast period FY23 to FY26 and shares insights on segments like UPI, Bharat Bill Payment System (BBPS), Embedded Finance, and e-commerce. 

India’s e-commerce market, which currently stands at around Rs 4 lakh crore, is expected to touch close to Rs 9 lakh crore by FY26. Customers from tier II and smaller cities are likely to drive this growth; and, therefore, will account for 75 per cent of all e-commerce transactions. Consequently, online payments will become more widespread in India.

As the adoption of digital payments among customers increases, businesses are leveraging technologies to enable digital transactions. Around 75 per cent of the close to 7 crore businesses in India are digitally enabled, and this number is expected to rise to approximately 85 per cent by FY26.

Commenting on the report, B Amrish Rau, CEO of Pine Labs, said, “From the foundational work on the JAM trinity to the development of India Stack, India has quietly orchestrated a revolution in online payments. These insights coming from the Redseer analysis, especially on the BBPS and UPI adoption, are a tell-tale sign of things to come. The future is increased tech-enabled digitisation at the online and offline point of sale and at Pine Labs, we are happy to be playing a part in it.”

“Our research suggests that online shoppers in India are expected to grow by 50 per cent in the coming three years to reach over 30 crores by FY26, further paving the way for the reach of online payments in the country,” added Jasbir Juneja, Partner at Redseer.

With over 70 crore internet users and a population of about 140 crore, India is poised to become a global leader in digital payments. The country’s online payments ecosystem has changed the customer’s perception of making transactions. Customers today prefer paying via UPI apps for most of their daily activities. 

From UPI and digital wallets to BNPL, online payments have come a long way. The digital payments market is expected to grow to around Rs 4 lakh crore by FY26 from the current around Rs 3.2 lakh crore economy. With the introduction of different technologies like IoT, AI, ML, and blockchain, their involvement in digital payment systems evolution cannot be underestimated.

The RBI conceptualised payment system, BBPS driven by National Payments Corporation of India (NPCI) also finds a mention in the Redseer report. As per its findings, BBPS is poised to witness a 30 per cent increase in transaction volumes and increase from 110 crore transactions in FY23 to 240 crores by FY26.