According to the latest study by digital payments firm PhonePe and Boston Consulting Group (BCG)India’s digital payment market is expected to more than triple to $10 trillion by 2026.

At present, the study said, 40% of all transactions in India are digital, and payments worth $3 trillion were processed by digital instruments in 2021. This does not include payments made for financial services, corporate business payments, and government payments.

The study said UPI still has headroom to grow and will account for 73% of all digital payment volumes by FY26.

In terms of acceptance, quick response (QR) codes have played a big part in explaining digital payment services in India, the report said. At present, QR-code payments are accepted by more than 30 million merchants in the country, a substantial increase from 2.5 million merchants five years ago.

India’s Unified Payments Interface (UPI) continues to grow, clocking 5.95 billion transactions worth Rs 10.41 lakh crore last month.

According to the PhonePe-BCG study, “The major contribution for the digital payments’ growth would be from merchant payments, that are expected to significantly digitize in the next five years, increasing from 20% digital penetration by value today to about 65% by 2026, a seven-fold growth from $0.3-0.4 trillion digital merchant payments today to $2.5- 2.7 trillion by 2026,”

UPI has supercharged India’s transition to non-cash payments, especially in person-to-person (P2P) fund transfers and low-value merchant (P2M) payments. UPI saw about a nine-fold transaction volume increase in the past three years, from five billion transactions in FY19 to about 46 billion in FY22, accounting for more than 60% of non-cash transaction volumes in FY22,” said the report.

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