India's e-comm mkt to grow from $83 bn in 2022 to $185 bn in 2026: Report

UPI driving consumers away from cash and helping financial inclusion, it says

Indian e-commerce was worth $83 billion in 2022 and will likely grow to $185 billion in 2026 as it is propelled by unified payments interface (UPI) transactions, said a report on Thursday.

India has emerged as a global leader in payments by developing a real-time payments (RTP) infrastructure, said the report by global financial technology solutions provider FIS. Cash use is declining in the country: it comprised 71 per cent of point of sale (POS) transaction value in 2019 and was just 27 per cent in 2022.

UPI recorded its biggest year-on-year (YoY) growth--of 74.1 per cent--in transaction volume in January 2023. This has helped e-commerce account-to-account (A2A) payments grow to $12 billion, up 53 per cent from 2021 to 2022. By 2026, these transactions are expected to grow by 195 per cent to $36 billion, while the e-commerce market size in the online space is expected to grow by 82 per cent.

UPI is driving consumers away from cash, helping financial inclusion and making India a world leader in payments, said Phil Pomford, general manager APAC, Worldpay Merchant Solutions at FIS.

“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,” he said.

UPI has grown a huge 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 a POS market share of 5 per cent in 2019 to 35 per cent in 2022.

Growing from 2.2 billion transactions in December 2020, to 4.5 billion in December 2021, and to 7.8 billion in December 2022, UPI has continued on an upward growth trajectory. 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.

Cash use is expected to decline by 34 per cent in transaction value and digital wallets are expected to rise in transaction value by 88 per cent by 2026, providing a greater boost to digital payments.