May 2023

The Indian payments

handbook – 2022–2027
Preface
Dear readers,
We are pleased to bring to you the third edition of ‘The Indian payments handbook’ for the period 2022–2027. Like
the previous editions, this year’s publication focuses on India’s fast-growing digital payments industry. We have
analysed the year gone by and captured the key learnings for the industry along with the progress made by the
Indian payments ecosystem in the last few years, key growth factors and emerging trends.
We have considered the change in customer’s habits who now prefer digital transactions due to the ease of use,
well-built digital payments acceptance infrastructure and secure transaction flows.
Based on the insights gathered from our discussions with key stakeholders in this space, we cover the latest
developments in the payments space, such as regularising the payment aggregator space by granting licences to
entities, the launch of Central Bank Digital Currency (CBDC), product innovations by payment system operators
(PSOs) and payment service providers (PSPs) which has expanded the use cases of transacting through digital
payments, introduction of market-driven pricing model in a regulated manner for few payment instruments that has
further enhanced the growth prospects of this industry in India.
India is already at the forefront when it comes to digital payments innovations across the globe and with the efforts
and initiatives of key stakeholders, such as regulators, banks, payment/FinTech companies, card networks and
service providers, we are confident that the industry is going to see tremendous growth in the coming years.
We hope you will find this report to be a useful and insightful read.
Regards,
Mihir Gandhi
Partner and Leader, Payments Transformation
PwC India

2 PwC | The Indian payments handbook – 2022–2027

Executive summary
India has become a model for digital payments adoption for countries across the globe. Digital payments are one of
the most important pillars of a financially inclusive country and helps in bringing people together under an organised
financial system. In the last two editions of our report, we focussed on revenue streams of different payment
instruments and identified areas to increase the use of these instruments. In this edition, we aim to decode how
different payment instruments are evolving and identify some of the developments in payments space which have the
potential to act as a catalyst for the future growth of this sector.
Digital payments in India continues to grow at a massive rate with a Y-o-Y transactional volume growth of 56% in
FY 2022–2023 and is expected to grow four times by FY 2026–2027. This growth can be attributed to the policies
implemented by the Government of India and the Reserve Bank of India (RBI) for promoting digital payments, the
emergence of FinTech with new technologies to ease user experience and PSPs building infrastructure to support
smooth transaction flows. Over the next five years, UPI is expected to constitute almost 90% of total transactional
volume in retail digital payments by expanding its adoption to rural areas and tier 3 and 4 cities. Credit card, national
electronic toll collection (NETC) and Bharat Bill Payment System (BBPS) are some of the other instruments which are
also expected to grow at a healthy rate.
Consumers are increasingly adopting digital payments. With new innovations and additions of new use cases, India
is at the verge of another boom in increased digital payments transactions. The Government and RBI’s focus on
regulating the digital payments ecosystem is fuelling the growth in the digital payments space.
UPI continues to maintain its incredible growth story with a Y-o-Y growth in transaction volume of 80%. In FY
2022–2023, the total transaction volume was a little over INR 83 billion and it is expected to grow four times by FY
2026–2027. UPI now accounts for over 75% of the overall retail digital payments in India. In FY 2022–2023, the
RBI launched new features in UPI like UPI 123Pay, UPI Lite, credit card linkage on UPI, UPI on NRE accounts, UPI
for foreign tourists and single block multiple debits to further increase the scope of UPI payments and increase the
number of UPI users.
Amongst cards, while credit cards had a Y-o-Y growth of 41% in transactional volume in FY 2022–2023, debit card
transaction volume grew by 6% during the same period. One of the reasons for a flat growth in debit card volume is
the shift in preference to pay using UPIs for face-to-face transactions. Credit card transaction is expected to grow in
the coming years with the linkage to UPI and new entrants entering the credit card issuance space.
The infrastructure for face-to-face payments, point of sales (PoS) and QR has also been growing not only in metros
and tier 1 cities but also in tier 2 and 3 cities. The Y-o-Y growth of PoS machines and QR codes is nearly 31% and
43% respectively in FY 2022–2023. Innovations in this space like Tap-to-Pay, soundbox have also promoted the use
of digital payments by enhancing the user experience while making payments.

3 PwC | The Indian payments handbook – 2022–2027

Table of contents
1. A look at the year gone by 05
2. An overview of the top payment instruments 10
3. The future of digital payments in India 25
4. Conclusion 32

4 PwC | The Indian payments handbook – 2022–2027

1.
A look at the year
gone by
In 2022, the payment processing sector led the market accounting for
more than a quarter of the worldwide revenue. The growing popularity of
e-commerce and the shifting focus towards quick payments throughout
the world is forcing shops to implement payment processing solutions to
give customers flawless checkout experiences.
There is a growth in the use of digital payments with over 40%1 of
individuals in middle-income nations (excluding China) making in-store or
online payments using a card, phone, or internet banking for the first time.
More than one third of individuals in all low and middle income nations paid
their power bills from a formal account. Globally, two-thirds of individuals make or
receive digital payments, with developing economies increasing their participation from
35% in 2014 to 57% by 2021.2 Globally, FY 2023 has also seen economic, political and
geographical issues which have affected the financial industry.

Evolving geopolitical alignments among countries

The removal of Russia from Society for Worldwide Interbank Financial Telecommunications (SWIFT)
and the suspension of operations by international card schemes have served as a wake-up call to the
rest of the world. Russian assets were frozen by the EU, the US and the UK who prohibited their citizens and
corporations from doing business with them. In response to this move, the Russian Central Bank has utilised
its SWIFT counterpart, the Financial Message Transfer System (FMTS), which was formed in the aftermath of
Crimea’s 2014 incursion. However, the volumes transacted through the system are quite less when compared to
the overall requirement of Russia.
Many Russian residents started transacting and investing in cryptocurrencies to safeguard their savings, as the value
of the Ruble diminished and the financial system became more restricted and vulnerable. Its impact was also seen
in the India–Russia trade. To deal with this, in July 2022, the RBI put in place a mechanism where trade invoices will
be settled in INR and the exchange rate will be market determined. But this arrangement is limited to the import of
defense equipment. There have also been discussions on the concept of a common currency for the BRICS nations
(Brazil, Russia, India, China and South Africa). The outcome of such a move can affect the dominance of the US dollar.
However, global acceptance of the same is still a major challenge. The conflict in Ukraine and the recent shift in focus
towards the crisis between China and Taiwan might bring changes in the Indian payments system.

1 https://www.worldbank.org/en/news/press-release/2022/06/29/covid-19-drives-global-surge-in-use-of-digital-payments
2 https://www.worldbank.org/en/news/press-release/2022/06/29/covid-19-drives-global-surge-in-use-of-digital-payments

5 PwC | The Indian payments handbook – 2022–2027

An overview of the Indian payments Cards, mainly credit cards, have maintained a consistent
contribution to the growth of digital payments in India
landscape where the increasing number of physical acceptance
points, expanding e-commerce use and increase in
In recent years, India has risen to the forefront of
awareness about credit cards has created easy access
digital payments by developing an ecosystem that
points for the consumers to use their credit cards for
facilitates the adoption and use of digital payments.
payment. Credit and debit cards have contributed to
In comparison to other countries, the rate of adoption
8.5% of total transactions volume but contributed only
of digital payment is very high and as a result, many
0.9% in terms of transaction value with a major increase
countries are planning to replicate the ecosystems
observed in number of credit cards. The reason behind
adopted by India. Digital transactions are expected to
this is that the growth percentage of debit card has
show a growth of 56% in a single year rising from INR
started to plateau while credit cards has increased due
71.97 billion in FY 21–22 to INR 112 billion in FY 22–23.3
to a low transacting base and customer preference
The increase is due to the payment infrastructure
towards them has just picked up in the last couple of
improvements, a responsive regulatory framework, and
years.
a stronger emphasis on customer-centricity. Owing to
the competition created by FinTechs and the services With the hype around digital payments, growth in offline
they provide, established banks have been pushed to payment system infrastructure has slowed down,
conduct research and develop better products. especially for ATMs. Even though cash in circulation
has increased by 28% till March 2022 from March 2020,
UPI’s popularity has grown to the point that peer-to-
ATM infrastructure has increased by only 2%. This is
merchant (P2M) transactions surpassed peer-to-peer
because of the high maintenance cost in comparison to
(P2P) transactions in terms of volume. Though UPI
the revenue generated by them. A major shift was seen
transactions volume contributed 63.4 % of the total
towards micro ATMs in 2022. According to RBI figures,
digital payment in FY 21–22, the total transaction value
there are 14.19 lakh micro ATMs in the country as of
contributed only 16.1% of the total digital payments
December 2022.5
which hints that the ticket size of the transactions is
lower. UPI which was primarily used for P2P transactions The focus of the industry has shifted towards new
has transitioned towards person-to-person-mobile developments like Digital Rupee and 5G which will boost
(P2PM) and P2M transactions. Growth in mobile app- digital payment systems in the coming years. These
based payments is another indicator of the affinity innovations have created an opportunity for new players
towards digital payments. In FY 2022–23, the number to come in with innovative products which will further
of transactions has grown by 80% from INR 46 billion to boost customer experience.
INR 83 billion with an increase in the transaction value
by 64%. This growth in transaction volumes has been
complemented by growth in QR code-based payment
infrastructure i.e. UPI QR and Bharat QR by 43.5%. UPI
transaction volumes are predicted to grow in the future
at a compound annual growth rate (CAGR) of 42% and
30% in the case of the transaction value.4

3 https://www.rbi.org.in/Scripts/PSIUserView.aspx?Id=21
4 https://www.rbi.org.in/Scripts/PSIUserView.aspx 5 https://www.rbi.org.in/Scripts/PSIUserView.aspx?Id=19

6 PwC | The Indian payments handbook – 2022–2027

Investment in FinTech Policies and regulations supporting
Funding in Indian FinTechs has drastically reduced digital payments
to USD 5.5 billion (approx.) in 2022, as compared to
USD 10 billion (approx.) in 2021.6 The funding inflow A number of initiatives have been taken by the
in 2023 is expected to decrease further this year. Government and the RBI in the digital payments space
Some of the reasons for the decline in funding are: this year. The RBI is focused to regulate and streamline
the entire payments ecosystem to secure the end-
1. Global economic slowdown and changes in the consumer and also lay the path for further growth in
economy of some countries digital payments adoption in the country. To make this
industry more inclusive and to better understand the
concerns and growth prospects, the RBI continuously
2. Introduction of regulations by the RBI for FinTechs releases consultation papers through which it intends to
along with guidelines to streamline and better understand the perspective of the various stakeholders.
monitor the sector due to increasing cases of For the first time, the RBI conducted two industry
fraud and malpractice workshops and discussions with Indian FinTechs in FY
2022–2023, held in Kashmir and Kochi, where the RBI
and participants deliberated upon various topics and
3. The RBI’s regulation on restricting non-banks the discussions were later formalised into policies and
from loading prepaid payments instruments (PPIs) notifications. Some of the key initiatives taken by the RBI
through credit lines – this has highly impacted the in FY 2022–2023 have been given below:
buy now pay later (BNPL) industry, where players
are either innovating their product features or UPI123PAY: The RBI launched UPI123PAY in March
shifting towards other digital products 20227 to enable feature phone users to make payments
through UPI. This will enable 400 million feature phone
users to adopt digital payments.
4. Shift in evaluating FinTechs from gross revenue
to net profit and not considering the number of DigiSaathi: In March 2022, the RBI and NPCI launched
customers or loans disbursed. DigiSaathi8 – a 24x7 helpline with a website, chatbots
and toll-free calls, which addresses user queries and
With the help of technologies like artificial shares information about all digital payment products to
intelligence (AI) and blockchain, FinTech is now increase awareness of digital payments.
evolving and aims to understand consumer Framework for geo-tagging of payment system touch
behaviour and offer new products customised to points9: In March 2022, the RBI issued a framework to
their requirements. FinTechs are being directly capture geo-tagging information of payment system
regulated by the RBI and are an integral part of RBI’s touch points provided by banks and non-banks payment
ecosystem now. There is also a rise in the number service operators. The same information needs to be
of collaborations between banks, non-bank financial reported to the RBI to help them monitor and understand
companies (NBFCs) and FinTechs. This has resulted the penetration of digital payment devices.
in exploring new segments like widening targeted
customer segments, supply chain payments and Master direction – credit card and debit card –
cross-border payments, where digital payments help issuance and conduct directions, 2022: In April 2022,
consumers address existing pain points. the RBI released master directions for issuers to regulate
the issuance and conduct of credit, debit and co-
branded cards. These guidelines aim to further improve
card security and ensure that proper communication is
shared with the cardholders.
Ban on non-bank PPIs loading through credit lines10:
In June 2022, the RBI issued a notice to non-bank PPI
issuers to not load their wallets and cards through credit
lines. This has impacted the BNPL industry as most
non-bank BNPL service providers and PPI issuers were
allowing customers to load their wallets through credit
lines.

7 https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=53385
8 https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=53385
9 https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=12260&Mode=0
6 https://economictimes.indiatimes.com/tech/startups/2022-year-in-review-fintec.h- 10 https://www.thehindu.com/business/rbi-stops-non-bank-ppi-issuers-from-load-
firms-gear-up-for-tumultuous-ride-in-2023/articleshow/96500512.cms?from=mdr ing-wallets-cards-via-credit-lines/article65550360.ece

7 PwC | The Indian payments handbook – 2022–2027

UPI Lite11: The RBI launched UPI Lite, an on-device Two examples of developments of promoting digital
wallet-based UPI system in September 2022. Through payments in other sectors are:
this, users can load money up to INR 2,000 in their
National Logistics policy: In order to better manage
wallet, which can be used to make payments in offline
the logistics sector, the Government of India plans to
mode. This will assist users to make UPI payments even
regularise it. Presently, the logistics sector is mostly
in places which have low or no internet connectivity.
defragmented and has a market size of INR 160 billion.16
Linking RuPay credit cards to UPI12: In September The Government aims to bring all stakeholders in the
2022, the RBI announced the linkage of RuPay credit logistics sector under a single platform – the Unified
cards to UPI. This will increase the adoption of digital Logistics Interface Platform (ULIP). Among other
payments and benefit its stakeholders due to the things, this platform will digitise most of the financial
following reasons: transactions in this sector resulting in increased digital
payments.
• lack of PoS machines in rural areas
• increase in credit card usage ONDC: Open Network for Digital Commerce (ONDC)
• Earnings to payment facilitators by charging merchant is an ecosystem through which the e-commerce
discount rate (MDR) to merchants for all UPI industry is going to be revolutionised by moving out
transactions made through credit card of a marketplace or platform-based model. ONDC will
• increase in sales to merchants as consumption is enable small merchants and local retailers to build their
expected to increase. businesses online. Presently, the Indian e-commerce
market penetration is around 8% which ONDC aims to
Inward, cross-border remittance through BBPS13: increase to 25% by FY 2024–2025.17
In September 2022, the RBI launched BBPS cross-
border payments for inward remittance. This will help
non-resident indians (NRIs) to now pay utility, water, and Consumer behaviour compliments
telephone-related bills directly from their mobile phones.
policy implementations
BBPS open for all categories of payments and
India has come a long way in terms of digitisation with
collections14: In December 2022, the RBI enabled both technological and public policy interventions and an
recurring and non-recurring payments and collections in ecosystem for the acceptance of payment systems
all categories. This will enable payments like education in India. Consumer behaviour has evolved and user
fees, tax payments and rent collections, to be made experience (UX) while using the payment system has
through BBPS. gained more importance. This behavioural change has
Payment mandate in UPI15: In December 2022, the RBI also been attributed to the rapid adoption of digital
enabled payment mandates in UPI. With this feature, UPI payments. Digital payments users now prefer to pay
users can block money in their UPI linked accounts for digitally for most daily transactions for both small
specific merchants, which can be later paid in multiple and big-ticket value. Consumers have moved from
debits. the era of cashback offers as using digital payment
methods has become more of a habit. To monitor the
CBDC: The RBI launched a pilot project for both retail
extent of digitisation of payments in India, the RBI has
and wholesale segments on 1 December 2022, within a
constructed a Digital Payments Index (DPI) in January
closed group. The RBI will take a phase-wise approach
2021 with March 2018 as the base period with a DPI
for the pilot, starting with four banks out of the eight
score of 100. The DPI score increased by approximately
shortlisted banks. The digital currency will operate for
30% and 29% in the year 2020–2021 and 2021–2022
both P2P and P2M models.
respectively when compared to 2019–20 and 2020–21
respectively.18

11 https://www.thehindu.com/business/rbi-stops-non-bank-ppi-issuers-from-load-
ing-wallets-cards-via-credit-lines/article65550360.ece
12 https://www.livemint.com/news/india/how-will-rupay-credit-cards-linkage-upi-
lite-bharat-billpay-cross-border-payments-help-customers-11664080427946. 16 https://commerce.gov.in/press-releases/national-logistics-policy-will-be-re-
html leased-soon-policy-to-create-a-single-window-e-logistics-market-will-generate-
13 https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=12386&Mode=0 employment-and-make-msmes-competitive-nirmala-sitharaman/
14 https://www.outlookindia.com/business/rbi-monetary-policy-upi-will-now-allow- 17 https://www.livemint.com/companies/news/what-is-ondc-india-s-project-for-an-
blocking-money-for-multiple-debits-bbps-to-include-all-payments-news-242998 open-e-commerce-network-11654097068290.html
15 https://www.outlookindia.com/business/rbi-monetary-policy-upi-will-now-allow- 18 https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR602D-
blocking-money-for-multiple-debits-bbps-to-include-all-payments-news-242998 PI147FB19811794BBB8CCBF29AF13B09CA.PDF

8 PwC | The Indian payments handbook – 2022–2027

Increase in the acceptance of digital payments: As
per RBI data, there has been an increase of over 500%
An increase in the salaried
in the acceptance of digital payment by merchants for employees customer base
the period April 2021 to September 2021 compared to
In comparison to FY 2020–21, the number of credit
the period October 2018 to March 2019.19 In the same
cards has increased by 19% and the transaction volume
period, UPI payments have increased by more than
has increased by more than 1.5 times in FY 2021–22.
1200%. Digital payments have increased by 216%
The trend has continued in FY 2022–23 as per the
in the month of March 2022 as compared to March
data shared by the RBI. Financial literacy rose after the
2019.20 Paper instrument usage, on the other hand, has
COIVD-19 pandemic and customers are now more likely
decreased dramatically during the same period with its
to rely on credit cards for short-term loan rather than
proportion of total retail payments falling from 3.83% to
personal loans. The expansion of business in tier 2 and
0.88% in terms of volume and from 19.62% to 11.47%
3 cities have increased the salaried customer base, and
in terms of value.
the new competitive product propositions in credit cards
Influence of payment behaviours of Gen Z and have driven the adoption of credit cards in the market.
millennials in the growth of digital payments:
Millennials and Gen Z are expected to form 50% of
the country’s population by 2030. These tech-savvy
individuals spend over two hours online per day. These
age groups have a faster adoption of digital payments,
unlike Gen X who still prefer cash transactions. At
present, Gen Z holds over 30% of the overall digital
transaction share.21
E-commerce continues to gain momentum: Another
change in consumer behaviour is the move from local
retailers to online e-commerce. E-commerce platforms
have seen a huge increase in their sales during this
period, specially from tier 2 to tier 4 cities. Many local
retailers have also moved their business online and now
offer their services in the e-commerce space. Some of
the main reasons for this change are:

1
Multiple options of products
on online platforms for the
consumers

5 2
Change in Positive word
behaviour of of mouth
consumers
to buy online

4 3
Ease of Safe, secure
shopping and and easy digital
quick home payment options
delivery online

19 https://www.rbi.org.in/Scripts/PublicationVisionDocuments.aspx?Id=1202
20 https://www.rbi.org.in/Scripts/PublicationVisionDocuments.aspx?Id=1202
21 https://bfsi.economictimes.indiatimes.com/news/fintech/millennials-at-fore-
front-of-online-finance-products-contribute-44-of-total-lending-report/97308820

9 PwC | The Indian payments handbook – 2022–2027

2.
An overview of
the top payment
instruments
Although there has been a preference for cash transactions in
India, UPI has gained popularity and is encouraging a culture of
digital payments. The share of digital transactions has increased from
11.26% in FY16 to 80.4%22 in FY22. The rise of digital payment options
has contributed to this shift in consumer behaviour. Customers can make
payments at any time and from any location using a variety of payment options,
including net banking, UPI payments, credit cards, debit cards, and e-wallets. The
shift can also be attributed to the growing acceptance of digital payments by retailers.

Future possibilities for growth

The Indian digital payments industry has been expanding steadily in the last five years at a CAGR
of 50% transaction volume-wise and 60% transaction value-wise respectively. The Government of
India and the RBI’s efforts to make India a digital payments-first nation is one of the reasons for this
increase. New players and evolving payment systems in the market are enhancing the user experience
by offering quicker digital payments and providing a unique user journey to make it their preferred payment
method/partner. This approach has increased transaction volume, particularly in metropolitan and semi-urban
regions. The reach in rural regions has also increased due of the availability of infrastructure and the willingness
of the masses to adopt digital payment methods.

22 https://timesofindia.indiatimes.com/business/india-business/power-of-digital-transactions-currency-in-circulation-declines-in-diwali-week-for-1st-time-in-20-years/article-
show/95276968.cms

10 PwC | The Indian payments handbook – 2022–2027

Figure 1: Overall digital payments market** National Electronic Toll Collection (NETC) is another
consistent contributor to the development of digital
Transaction volume (in billion) payments, growing at a CAGR of 110% in the last five
411 years. The reason behind this is the ease of obtaining
and using a FASTag which saves customers time while
309 travelling.
Let us look at some of the digital payment instruments in
226
detail:
156
103 A. UPI
64
Payments through UPI grew at a rate of 80% from the
last financial year. In February 2023,23 UPI accounted for
over 75% transaction volume of the overall retail digital
FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E payments in India. As per PwC’s analysis, it is estimated

that UPI will record 1 billion transactions per day by FY
2026–2027. As users continue to increasingly opt for
UPI for small-value transactions, the average ticket size
has seen a decline. By end of FY 2022–23, it is expected
Transaction value (in trillion) that the volume of P2M transactions will surpass P2P
518 transactions with P2M accounting for 52% of the overall
UPI transaction volume.
418
333
Figure 2: Transaction volume of UPI
241 (in billion)
166 379.72
106
281.28
200.91
133.94
83.71
FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E

46
FY 21-22

FY 22-23

FY 23-24 (E)

FY 24-25 (E)

FY 25-26 (E)

FY 26-27 (E)
Source: RBI, NPCI, PwC analysis
**Includes UPI, cards, NETC and PPIs

Source: RBI, NPCI, PwC analysis

UPI is expected to remain the nation’s fastest growing
payment mode and a key contributor towards digital Figure 3: Transaction value of UPI
payment adoption in the country. Payments have
(in INR trillion)
become more straightforward and practical for end
users owing to the ease of use of UPI QR codes and 455.6
the interoperability of payment service providers (PSPs) 365.7
which contributes to the rise of its share in total digital 291.3
payments. 207.6
139.14
Payments made using credit and debit cards continue 84.1
to increase across the country due to the growing
awareness about the use of cards among customers.
FY 21-22

FY 22-23

FY 23-24 (E)

FY 24-25 (E)

FY 25-26 (E)

FY 26-27 (E)

Some of the elements driving this rise include the

introduction of new companies with a focus on digital
experiences and a rising customer base in tier 3 and
tier 4 cities. With features like tokenisation and EMI
it has become safer and more convenient to use for
transactions. Source: RBI, NPCI, PwC analysis

23 https://www.rbi.org.in/Scripts/PSIUserView.aspx?Id=21

11 PwC | The Indian payments handbook – 2022–2027

 customer stickiness towards their brand. This also
helps banks, NBFCs and FinTechs to understand the
Key trends observed in UPI payments spending behaviour of the end-consumers and offer
curated products as per customers’ requirement.
1 billion transactions per day • Cross-selling: Most of the UPI TPAPs cross-sell
other products like insurance and loans to existing
UPI to achieve 1 billion transaction per day by customer base.
FY 2026–2027
• Advertisements/endorsements: Brands which seek
visibility to acquire new customers, endorse their
UPI is the prefered mode for low value products on these platforms by offering discounts due
transaction to the magnitude of the transaction volume and the
number of users.
Reduction of average ticket size while increase
in transaction volume shows that UPI is gaining
popularity as the prefered mode for low value
transaction

P2M vs P2P
Transaction volume of P2M is expected to
surpass P2P in FY 2022–2023 with P2M
accounting for 52% of the overall UPI volume

Another key aspect to consider is the revenue source

and business opportunity UPI offers for its service
providers. Given below are some of the key revenue
streams UPI offers its service providers:
• Per transaction cost (MDR): Currently, UPI is largely
transacted on NIL MDR but from 1 April 2023, P2M
transactions of over INR 2,000 done through PPI
on UPI will have an interchange charge of 1.1%.
Considering the calculation shared by the RBI in its
discussion paper on ‘Charges in Payment Systems,24
the combined cost to all PSPs is 0.23% for a P2M
transaction. For an expected transaction value of
around INR 1,37,000 billion in FY 2022–2023 and
one-fifth of it to be P2M, the approximate revenue
opportunity is INR 60 billion.
• New customer acquisition: Since it is a mass
product, UPI TPAP is one of the quickest and
cheapest source of acquiring new customers. Many
NBFCs and FinTechs offer cashbacks and rewards to
users transacting through their TPAP to attract new
customers.
• Engaging with existing customer base: Many
FinTechs, NBFCs and banks have started to offer UPI
payment services through their mobile application
to engage more with their customers and increase

24 https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/DPSSDISCUSSIONPA-
PER5E016622B2D3444A9F294D07234059AA.PDF

12 PwC | The Indian payments handbook – 2022–2027

Figure 4: Revenue of UPI (in INR billion) 1. UPI 123PAY

497 There are approximately 40 crores of feature phone

users in India. In March 2022, the RBI launched UPI
384
123PAY through which feature phone users in India can
289
make payments digitally.26 This product has the potential
201
152 to be the next big disruptor in the digital payments
87 space and increase the use of digital payments in rural
areas.
With UPI 123PAY, users can make UPI payments through
FY 21-22

FY 22-23

FY 23-24 (E)

FY 24-25 (E)

FY 25-26 (E)

FY 26-27 (E)
IVR numbers, missed calls, sound-based technology
and functionality implemented by original equipment
manufacturer (OEM).

Source: RBI, NPCI, PwC analysis 2. UPI Lite

UPI Lite – an on-device wallet feature in UPI – was
launched on 16 March 2022. Users can maintain up
to INR 2,000 in their UPI wallet at any given instant by
Income lines for UPI allocating funds from their account to UPI Lite. Users will
then be able to make UPI transactions in offline mode of
MDR P2P up to INR 200 per transaction through UPI Lite.
interchange As per NPCI, at present, 50% of all UPI transactions
income have a transactional value of up to INR 200. With 75%
of the total volume of retail transactions (including cash)
in India having a transactional value of less than INR
100, this feature will further enhance digital payment
P2P fees Mandate adoption in the country. Many national banks and small
registration finance banks see great potential in this feature and have
fees enabled it in their platforms.
This feature will also be beneficial in semi-urban and
rural areas where internet infrastructure is still not as
established as it is in metro cities. Merchants will be able
To promote digital transactions through RuPay debit to accept payments through UPI even with minimum
cards and UPI, the Government has increased the internet connectivity infrastructure.
financial incentives provided to the acquiring bank from
INR 1,300 crores in FY 2021–2022 to INR 2,600 crores 3. Credit on UPI
in FY 2022–2023. This incentive is provided to cover the
cost incurred by PSPs and to strengthen the payments The RBI announced the linkage of credit cards with UPI
infrastructure.25 in September 2022. The service is introduced on RuPay
which might be followed by other networks in the future.
UPI has been a game-changer for the exponential Acceptance of all card types are also enabled through
growth of digital payment acceptance in India as it has Bharat QR.
provided an alternative payment option for small value
transactions which were earlier done mostly in cash. In FY22, P2M transactions contributed 43% in volume
but only 19% value with a very small ticket size. This
With the motive of further increasing the user base, the trend may change as the ticket size of UPI on the credit
RBI and NPCI launched two new products – UPI 123PAY card may increase.
and UPI Lite. These products enable users to make
payments through feature phones and even without Connecting credit cards to UPI is a great move which
internet connectivity. The RBI has also expanded the may lead to a multi-fold increase in UPI volumes and
acceptability of UPI by enabling UPI for multiple new use act as a booster for more credit card penetration in the
cases. market and increase the credit card volume. Cardholders
will also be able to reap benefits from rewards and
loyalty programmes of credit card issuers. Subsequently,
it can also lead to a shift from offline to online payments.

25 https://pib.gov.in/PressReleasePage.aspx?PRID=1890314 26 UPI 123PAY: https://www.npci.org.in/what-we-do/upi-123pay/product-overview

13 PwC | The Indian payments handbook – 2022–2027

Another latest move by the RBI is to allow banks to offer delivery requires manual interventions and cash received
pre-sanctioned credit lines like overdraft to customers passes through the delivery executive or logistics partner
which can be accessed through UPI. This will create before the seller finally receives it.
additional revenue lines for banks.27
From the end-consumer perspective, this feature
4. UPI access to NRE accounts will also help the customers gain more trust to make
payments to merchants as the amount gets debited from
Non-residential external (NRE) accounts mapped
their account once the product/service is received.31
with international phone numbers are now allowed
to use UPIs. Presently, this feature is enabled for 10 This feature will also be helpful in subscription-based
countries, where the majority of the 200 million NRIs payments like OTT platforms, education fees and
reside. Customers can now do real-time P2P transfers insurance premiums. Presently, merchants offering
to their family members in India and can also make bill subscription-based services are facing issues after the
payments like utilities and tax payments easily. This RBI released guidelines on standing instructions or
feature is expected to further increase foreign inward e-mandates on cards in 2021 which mandate issuing
remittance.28 banks to notify cardholders before debiting subsequent
payments and providing an option to cardholders to opt
5. UPI One World – enabling UPI for foreign travellers
out of the subscription. The guidelines also mandated
Through UPI One World, the RBI has allowed foreign the issuing banks to obtain second level authentication
travellers to load PPI wallets linked to a UPI, which (OTP) from the cardholders before debiting subsequent
they can use for making payments across all merchant payments of ticket sizes more than INR 5,000, which
outlets in India accepting QR-based UPI payments. This was later increased to INR 15,000 in 2022. The single
feature is presently enabled for tourists coming from block multiple debit feature of UPI will enable merchants
G-20 countries and the wallets will be available at select to seamlessly receive subsequent payments from the
airports in India.29 To offer this wallet to foreign nationals customers.
outside airport, the RBI has also permitted four entities
(two banks and two non-bank PPI issuers) to provide
this facility.30
In future, this facility can be offered to all foreign
nationals coming to India. Apart from the increase in UPI
transactions, this feature will also help foreign nationals
to make hassle-free payments in India. It will also reduce
the burden of converting currencies and carrying cash in
INR. Efforts should be made to build a system in which
foreign travellers coming to India can load their wallets
by themselves.
6. Single block multiple debits
The RBI has enabled a single block multiple debit feature
in UPI, through which customers can now block specific
amounts for a particular merchant. The customer can
do multiple debits of this blocked amount until it gets
exhausted. This feature can act as an alternative to
cash-on-delivery and will be highly beneficial in P2M
transactions, especially in the e-commerce sector
where it will give more trust to merchants by assuring
timely receipt of money. Merchants or sellers in the
marketplace will also reduce the cost involved in the
realisation of payments in cash-on-delivery. Cash-on-

27 https://timesofindia.indiatimes.com/business/india-business/rbi-allows-banks-to-
offer-pre-approved-credit-on-upi/articleshow/99309703.cms
28 https://timesofindia.indiatimes.com/business/india-business/upi-access-to-
nre-a/cs-with-intl-sims/articleshow/96920541.cms
29 https://travel.economictimes.indiatimes.com/news/technology/foreign-tour-
ists-travellers-in-india-can-now-make-payments-using-upi-know-more-de-
tails/98179802
30 https://travel.economictimes.indiatimes.com/news/technology/foreign-tour- 31 https://timesofindia.indiatimes.com/business/india-business/explained-upis-sin-
ists-travellers-in-india-can-now-make-payments-using-upi-know-more-de- gle-block-and-multiple-debit-facility-will-see-many-switch-from-cash-on-deliv-
tails/98179802 ery-to-new-functionality/articleshow/96100933.cms

14 PwC | The Indian payments handbook – 2022–2027

B. NETC Figure 7: Revenue of NETC (INR billion)
There was an increase in the movement of vehicles 41
across India after the COVID-19 pandemic as the 34
economy started recovering. Moreover, since the
28
Government mandated the installation of NETC tags on
four-wheelers, the usage of tags has increased steadily. 22
Furthermore, the number of four-wheeler vehicles has 16
increased in the country, thereby increasing the number 11
of tags issued.
In FY 2021–22, the NETC programme which was
deployed throughout the nation, processed 2.4 billion

FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E
transactions (84% growth YoY) worth INR 380.8 billion
(67% growth YoY) and cut the average wait time at
toll booths in half to less than two minutes per car.32
Through the NETC programme 36 issuers issued a total Source: RBI, NPCI, PwC analysis
of 49.585 million FASTags in FY 2021–22. In FY 2021–
22, the initiative had a 2.1 times increase YoY, with an
average daily collection of INR 107 crore. The number of
transactions is expected to grow by 23% CAGR in the
next five years and the values are expected to surpass Income lines for NETC
the volume growth, as travel is expected to grow and the
increase is expected to be 26% CAGR for the next five Tag MDR
years. issuance fee

Figure 5: Transaction value of NETC

(in INR trillion)
1.4
1.1
0.7
0.9 NETC at a glance as of January 2023
0.5
0.4

11
FY21-22

FY22-23

FY23-24 E

FY25-26 E

FY26-27 E
FY24-25 E

Number of acquirer banks live on NETC

28
Source: RBI, NPCI, PwC analysis

Number of issuer banks live on NETC

Figure 6: Transaction volume of NETC
(in billion)

5.7
6.7
7.7
1,050+
4.5
NETC is live at 1,050+ toll plazas across
3.4 the country
2.4

50+
FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E

Number of parking plazas accepting NETC

Source: RBI, NPCI, PwC analysis Source: NPCI, NHAI

32 https://www.pwc.in/assets/pdfs/consulting/financial-services/fintech/pay-
ments-transformation/evolving-toll-payments-landscape-in-india.pdf

15 PwC | The Indian payments handbook – 2022–2027

Factors affecting the NETC industry In FY 2022–2023, many new-age banks launched
customised cards to target customers of different
• GPS-based toll collection system: The union demographics.
minister of India conveyed the plan of introducing
the new system of toll collection which will be rolled
out in the next six months. To enable automated toll
collection without halting the cars, the Ministry of Figure 8: Transaction volume of cards
Transport and Roads is implementing a pilot project (credit and debit) (in billion)
for automatic number plate recognition systems
9.1
(through automatic number plate reader cameras).
This move will further bring down the waiting time
6.9
and the toll charge will be deducted as per the
amount of distance covered by the vehicle on these 5.1
roads. Though it will improve the collection of tolls,
3.9 3.8 3.6 3.8 3.9 3.9
maintaining the equipment in the vehicles can be a 3.4
2.9
difficult task for the Government 2.2
• Other value added use cases: Innovative ways to
make payments for charges like EV stations, in-vehicle
payments technology, traffic violation challans, and FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E
payments at drive-through restaurants and drive-in
theatres as this will become a convenient payment
and secure method with the semi-closed NETC
platform. Certain changes regarding authentication Debit card Credit card
of payments for these modes and the regulatory
Debit card (Estimated) Credit card (Estimated)
challenges needs to be addressed as data cannot be
shared with multiple users. But the benefits surpass Source: RBI, PwC Analysis
the efforts required to implement these use cases.

C. Cards Figure 9: Transaction value of cards (credit

The card industry continues to grow at a healthy rate. and debit) (in INR trillion)
Cards, both debit and credit, continue to be one of
the most used payment instruments for retail digital 46.5
payments.
36.3
A key trend observed is that the volume of transactions
in credit cards is expected to surpass debit cards by FY 27.2
2024–2025. In FY 2022–2023, the transaction volume 19.7
of debit card is expected to decrease by 6% from FY 14.3
9.7 9.6 10.3 10.8
2021–2022. Primarily, the major use case of debit card 7.3 7.2 8.8
transaction is cash withdrawal, which can now be
replaced by an easier way of withdrawing cash using
UPI. Another reason for the decline is the replacement of
FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E

debit card swipe on PoS to UPI payments.

The growing preference of consumers paying through
credit card can be attributed to the following factors.
Debit card Credit card
Debit card (Estimated) Credit card (Estimated)
Widening of credit card user demographies
Source: RBI, PwC Analysis
like age group, self-employed

While credit card issuance is expected to grow at a

Loyalty programmes, discounts,
CAGR of 21% in the next five years, debit card issuance
cashbacks on credit card is expected to have a stagnant growth with a CAGR of
3% in the same period.

Credit card penetration to tier 2 and 3 cities

16 PwC | The Indian payments handbook – 2022–2027

Figure 10: Growth in card issuance (credit
and debit) (in million) Income lines for cards

154 183 Interest and Fee

104 127
85 float income income
74

918 961 1000 1035 1071 1103

Interchange
income
FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E

Key trends on cards

Debit card Credit card
Market landscape
Debit card (Estimated) Credit card (Estimated)
Source: RBI, PwC analysis New-age banks More variations of Entrants of
issuing customised co-branded NBFCs and
cards for different cards between FinTechs in credit
demographies of issuers and card business
Revenue through the credit card business accounts customer base big merchants through
for nearly 76% of the overall cards’ revenue in FY across different co-branding
2022–2023, making it a lucrative business segment product categories arrangement
for banks, NBFCs and FinTech. The revenue for credit with banks
card issuance is increased by 42% in FY 2022–2023
compared to FY 2021–2022 and is expected to grow by Regulatory
a CAGR of 33% for the next five years.
RBI regulating the entire ecosystem to further protect the
cardholder from frauds and card misuse
Figure 11: Revenue of cards (credit and
debit) (in INR billion) Product innovation

709
Launch of UPI on Stagnant growth in
credit cards debit card volume
567

439
In April 2022, the RBI issued a master direction on
342
the issuance of cards (debit and credit)33 to further
262
streamline the card business ecosystem and secure
196
cardholders from existing frauds and card misuse. As
per the direction on card issuance and closure, issuers
can activate credit cards only after explicit consent
through an OTP from the cardholder. In case of non-
FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E

activation of the card within 30 days of issuance, the

issuer should close the card. Issuer is responsible for
any financial loss that may arise due to misuse of the
credit card before it reaches the cardholder.
Source: RBI, PwC analysis
The master direction shows the RBI’s intentions to allow
NBFCs to issue cards. Before this circular, only two
NBFCs had the licence to issue. Through this circular,
Credit card transaction is expected to grow at a the RBI has mentioned that any NBFC with a minimum
substantial rate after enabling it on UPI. net-owned fund of INR 100 crore that wants to issue
cards can apply to the RBI to seek permission for the
same.
33 https://rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=12300

17 PwC | The Indian payments handbook – 2022–2027

Presently, four major banks constitute over 70% of the Figure 13: Transaction value of PPIs
credit card market in India. Owing to this circular, it is (in INR trillion)
expected that along with new-age and small finance
banks, a few NBFCs will also enter the market and 4.3 4.6
3.9 4.1
reduce the skewness of the current issuer presence. 3.7
In addition to growing the overall credit card market in
India, this circular is expected to bring about further
adoption of credit cards by customers.

D. PPIs

FY 22-23

FY 23-24 (E)

FY 24-25 (E)

FY 25-26 (E)

FY 26-27 (E)
Prepaid cards are a quick way to make payments.
Due to the growing use of smartphones and the
internet, India has made significant developments in
the e-commerce sector in the last ten years, which
has resulted in boosting the use of prepaid cards for
online transactions. This is especially true for BNPL Source: RBI, PwC analysis
instruments, whose acceptance rate has surged over the
past few years.
The industry is expanding exponentially – in large part
due to the widespread usage of prepaid cards filled with Income lines for PPIs
credit. Nevertheless, the RBI became aware of this, and
in a circular dated 20 June 2022, it restricted the loading Transaction Float/
of prepaid cards using credit lines. The future of several charges/ breakage
FinTech businesses’ present business models was loading fee income
questioned by the RBI, and many of them had to change
their business models in order to survive.
Even with such challenges, the industry was expected Interchange
to grow by 16% in terms of transaction volume and 13%
income
in terms of value in 2022–23. While the transactional
value of travel and gift cards is expected to grow at
a stable rate of 27% and 16% CAGR in the next five
years, growth of m-wallets and prepaid cards has rapidly
decreased after the June 2022 notice by the RBI.
Factors affecting the future of PPIs
1. Higher demand for innovative prepaid offerings:
Figure 12: Transaction volume of PPIs Gift card is an example of prepaid offerings,
(in billion) which was linked with m-wallets for ease of use.
Earlier, it was just like a normal closed-loop card
9.8 10.3 which could be used for purchasing products
8.6 9.2
7.9 from many outlets, but now many organisations
– especially e-commerce giants – have started to
offer customised gift cards that offer options to
the customers which make it easier to use and
customise as per the customer’s requirements. The
flexibility of having it as a physical card and in a
FY 22-23

FY 23-24 (E)

FY 24-25 (E)

FY 25-26 (E)

FY 26-27 (E)

digital form provides more options for consumers to

choose from. Similar innovations are being expected
in other products as well.
2. Need for new use cases: BNPL was instrumental
Source: RBI, PwC analysis in the growth of PPIs in India. After the latest
RBI mandate, BNPL service providers are now
collaborating with banks to offer their product.
However, this is yet to gain significant momentum.

18 PwC | The Indian payments handbook – 2022–2027

 New use cases are required to replace the plateauing
offerings of PPIs. With increasing prominence
of wearable devices, exploring payments via
smartwatches, home automation systems, etc., will
provide convenience to the customers. Using latest
technologies like artificial intelligence will also help
to provide security and detect fraud, improving the
customer’s confidence.

E. Merchant acquisition
One of the major pillars in digital payments is the
merchant-acquiring infrastructure. In order to promote
digital transactions, it is important that merchants – both
online and offline – have digital payments acceptance
infrastructure. With new FinTech entrants, many
innovative products are being developed that enable
ease of payments for customers, reduce fraud, improve
cybersecurity, decrease transactional failures and
facilitate smooth settlements to merchants.
Innovative Availability of PoS
The ‘tap to pay’ option, which was previously enabled PoS and QR and QR payment
only for cards, has now been extended to smartphones
and smartwatches. Fridge magnet QR codes are ideal solutions like options in all
for recurring payments like utility, mobile bills, taxes, fridge magnets, P2G (Person-to-
education, loan EMIs and insurance premiums. ‘Card card-on-delivery, government),
on delivery’ is another payment option which most smartphone PoS, utility bill payment
e-commerce platforms offer, in order to reduce ‘cash on dynamic QR outlets
delivery’.
The online space will now have more focus, with entities
receiving in-principle approval to operate as a payments
aggregator and being directly governed by the regulator. Brick-and-mortar Entry of new-
These entities offer embedded solutions to merchants, stores seeing sales age banks and
which include innovative payments solutions and lending
similar to pre- FinTechs in card
and investment products. The simple payments gateway
is now evolving into a model with additional features like COVID-19 times and PPI issuances
dynamic routing of transactions to different acquirers, due to increased
tokenisation and automatic OTP detection to enhance PoS transactions
customer experience, thus reducing transaction dropouts
and failures.
Merchants can now send payments links to customers
directly through SMS, e-mail, messaging applications
Customised loyalty Changing
and other chatbots. Furthermore, multilingual checkout programmes, co- consumer
pages also help merchants to connect better with their branded cards, preference to carry
customers from different demographics. cashbacks and less cash and pay
Risk-mitigation algorithms like transaction amount limit, incentives digitally in physical
frequency checks, data security blacklisting of bins, and stores
transactions originating from certain geographies have
reduced fraudulent activities to a large extent and helped
in gaining confidence of both merchants and customers.
The gross revenue in merchant acquiring is expected to
With physical stores opening up to pre-pandemic grow by over 200% by FY 2026–27 as compared to FY
capacity, there is a rapid growth in PoS transactions. 2022–23.
This growth can be attributed to the following factors:

19 PwC | The Indian payments handbook – 2022–2027

Figure 14: Merchant acquiring gross Figure 16: Transaction value of BBPS
revenue (in INR billion) (in INR billion)
977 9,086
775
6,689
596
443 4,646
314
226 3,054
1,916
1,152
FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E

FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E
Source: PwC analysis
Source: NPCI, PwC analysis

The future scope of development includes payments by

biometric scanning (eyeball/fingerprint scan) in offline Figure 17: Revenue of BBPS (in INR billion)
mode and interoperable tokenisation in online mode.
41
F. BBPS
31
BBPS continues to grow at a substantial rate. The
transactional value of BBPS has increased to a YoY 22
growth of 66% in FY 2022–23. With all categories now 15
open for BBPS and foreign inward remittance enabled 9
through BBPS, the transactional volume is expected to 6
grow by over four times in the next five years from 1.05
billion in FY 2022–23 to 5.4 billion in FY 2026–27.
FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E
Figure 15: Transaction volume of BBPS
(in million) Source: NPCI, PwC analysis

4,911

3,665

2,581
1,721
1,103
668
FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E

Source: PwC analysis

20 PwC | The Indian payments handbook – 2022–2027

 Utility payments and loan repayments continue to
account for the highest value in the BBPS ecosystem.
Some of the major developments
which have been a catalyst to the
growth of BBPS include:
BBPS revenue line
Foreign inward Foreign inward remittances
through BBPS have been Interchange paid by biller operating unit
remittances
enabled for NRIs for tax/utility (OU) to customer
bill payments.
Customer
Net-worth The RBI has reduced convenience fee
requirements of the minimum net-worth
BBPOU requirement for entities to
become BBPOU from 100
crore to 25 crore.
Float income
Open for all The RBI has increased the
categories scope of BBPS by including
all categories of payments
and collections – both
Interchange paid by biller
recurring and non-recurring
OU to customer OU
in nature.

G. Cross-border payments
Figure 18: Category-wise contribution of
BBPS Cross-border payments have been growing rapidly due
to the entrants of new-age FinTechs in this space. These
0.9% 0.6% FinTechs have developed and introduced new solutions
0.7% 2.1%
that will further ease transacting across countries. With
1.9% 0.5%
an estimated inflow of over USD 95 billion, India is the
2.2% largest market for inward remittance flow.
The RBI has been working towards regulating and
streamlining cross-border payments. For instance, by
facilitating foreign inward remittances through BBPS,
around 30 million NRIs will now be able to directly pay
53.2% tax/utility bills for their home(s) in India. Moreover, the
RBI has completed the second cohort of a regulatory
sandbox for cross-border payments and approved the
27.8% solutions offered by four entities. It has also extended
the scope of cross-border payments for on-tap solutions
and is welcoming applications for the same for regulatory
1.8% sandbox testing and approval.35
8.2%

Electricity FASTag DTH Loan repayment

Mobile postpaid LPG Landline postpaid
Broadband postpaid Gas Water Others

Source: NPCI34, PwC analysis

34 https://www.npci.org.in/what-we-do/bharat-billpay/product-statistics/bharat-bill-
pay-ecosystem-statistics 35 https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=54315

21 PwC | The Indian payments handbook – 2022–2027

Figure 19: Cross-border remittances The CBDC has the potential to resolve these two
(in INR billion) concerns in cross-border payments in India through the
following:
11,628
10,668 1. Decentralised operation: Such an operation will
9,787 ensure that payments transactions have fewer hops
9,062
8,391 and regulators involved. This will reduce the cost
7,842
6,703 otherwise paid to these regulators.
2. Real-time settlement: The payee can directly pay
to the receiver’s CBDC wallet.

1,669 The core technology enabling CBDCs is blockchain.

1,042 1,219 1,427
614 758 883 However, due to limited exposure, there is a lack of
awareness and trust among people towards blockchain
technology handling financial transactions. The
2021

2022 E

2023 E

2024 E

2025 E

2026 E

2027 E
cryptocurrency market is also unpredictable. Therefore,
the Government and RBI need to frame guidelines and
Outflow Inflow regulations for enabling the widespread use of this
Outflow (Estimated) Inflow (Estimated) technology in cross-border payments to create a stable
payment mechanism for the consumers which is safe
Source: RBI, PwC analysis and will boost the confidence of the customers to use
the payment method.

As per a World Bank report,36 the average cost of H. ATM transactions

remittance is around 6%. One of the Sustainable
Development Goals (SDG) of the United Nations is to India is moving towards a digital economy after
reduce this cost to 3% by 2030. demonetisation. According to official data, the value and
volume of banknotes in circulation increased by 9.9%
and 5.0% respectively, during 2021–22, as opposed to
16.8% and 7.2% respectively, during 2020–21.37 This
underlines the fact that cash flow is necessary for a
Traditionally, there are two major nation with a large population, and ATM networks play a
concerns regarding cross-border crucial role in enabling and preserving the same.
payments. In India, ATMs have become a popular delivery method
for financial transactions. Although clients can use
Time taken for • Settlement cycle of
ATMs to conduct a number of banking operations, cash
end-to-end traditional instruments in
withdrawal and balance inquiries have been the primary
transaction flow cross-border payments:
uses of ATMs. Moreover, after the rule passed by the RBI
and settlement Approximately 4–5 days
regarding the activation of credit cards within 30 days of
issuance, ATMs are being increasingly used for setting
High transaction • Complexities in settlement and resetting the card pins and activating cards. These
cost procedures due to multiple factors have necessitated the establishment of ATMs
currencies involved on almost every street corner in the country. However,
it is expected that the number of financial transactions
• Transaction flows through via ATMs may dwindle after FY 2026–27 due to the
multiple banks, payment increasing adoption of digital payments systems like
operators and payment UPI, CBDC and cards.
facilitators

36 https://remittanceprices.worldbank.org/sites/default/files/rpw_main_report_and_
annex_q122_final.pdf 37 https://m.rbi.org.in/scripts/AnnualReportPublications.aspx?Id=1350

22 PwC | The Indian payments handbook – 2022–2027

Figure 20: Number of ATMs (in lakhs) Figure 23: Revenue of ATMs (in INR billion)
2.28 95
2.26 91
2.24 86
2.22 81
2.20 73
70
2.15
FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E
Source: RBI, PwC analysis

FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E
Figure 21: Transaction volumes of ATMs
(in billion) Source: RBI, PwC analysis

8.2 8.6
7.8
7.4 Factors affecting the ATM industry in India
6.9
6.5
1. Rationalising of ATMs: Urban areas in India
generally have a considerable number of ATMs
situated throughout the cities. With the development
of rural areas and the increase in the reach of
infrastructure in these areas, new ATMs are being
installed to fill the gap. The average number of ATMs
per one lakh people has come down from 21.44 to
around 17 which implies that the number of ATMs is
FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E

less than the population growth of India.

2. Dependency on ATMs: Although net banking can
cater to maximum requirements of customers,
Source: RBI, PwC analysis activation of cards remains dependent on ATMs.
In addition, India still uses cash for most of
its transactions – especially in rural areas and
unorganised sectors. This increases the requirement
Figure 22: Transaction value of ATMs
for ATMs in the country.
(in INR trillion)
3. Low returns on investments: India continues to
40.8 struggle with the low revenue generated from each
39.2
37.3 ATM against the total cost of setting, maintaining
35.2
32.9 and servicing the ATMs. This can be demonstrated
31.0
by the fluctuating number of active ATMs throughout
the year. While new players are expanding their
reach by opening ATMs, many established ATMs
have started to shut down due to its economic
difficulties.
FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E

Source: RBI, PwC analysis

23 PwC | The Indian payments handbook – 2022–2027

 Figure 25: Transaction values of NACH
Income lines for ATM (in INR trillion)
591
Non-financial Financial
498
transaction transaction
422
interchange interchange 359
fees fees 307
246

I. National Automated Clearing House

(NACH)

FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E
In the last four years, the NACH has grown at a CAGR of
11.6% in terms of the number of transactions and 18.6%
in terms of the total transaction value. A similar increase Source: NPCI, PwC analysis
of 13.5% and 17.8% CAGR in terms of transaction
volume and value respectively, is expected in the future,
as the use of direct payments will increase owing to the Benefits
ease of payments. For banks: It is a cost-effective solution that has high-
security features and provides a near real-time cycle
time. Moreover, it has a single set of rules for Indian
Figure 24: Transaction volumes of NACH Financial System Code (IFSC), Magnetic Ink Character
(in billion) Recognition (MICR) and Issuer Identification Number
(IIN), which promotes interoperability. The system
8.4 offers strong information interchange, a well-developed
7.3 mandate management system (MMS), an online dispute
6.4 management system (DMS), customised MIS capabilities
5.7 with the ability to handle lakhs of transactions in one
5.1
cycle, making it a future-ready solution.
4.2
For customers: It is a robust system which tracks
the due date and debits the required amount using
automated authentication. This not only saves time
spent doing the paperwork but also prevents customers
from defaulting in their transactions.
For organisations: As consumers start paying through
FY21-22

FY22-23

FY23-24 E

FY24-25 E

FY25-26 E

FY26-27 E

NACH, companies can automate these tasks and

increase the number of transactions per day. This
automation can reduce the scope of human errors and
Source: NPCI, PwC analysis improve the efficiency of the workforce.

24 PwC | The Indian payments handbook – 2022–2027

3.
The future of
digital payments
in India
Digital payments in India is expected to experience accelerated growth in
the coming years with new technologies and addition of new use cases in
existing payment modes. It will play an important role in the transition of
other sector towards digitisation.

1. Payments on track for simplifying cross-

border transactions

A. BBPS inward payments

The RBI recently announced that it will now allow foreign inward remittances to be received
under the Rupee Drawing Arrangement (RDA) and be transferred to the KYC compliant bank
account of the biller (beneficiary) through BBPS.38
However, the following conditions need to be met in order to facilitate this:
• Bank accounts must be KYC-compliant. If the accounts are not KYC-compliant, money can be
transferred or withdrawn once KYC is completed.
• The initiating bank must mark the transaction as direct-to-account remittance for the recipient bank to
understand that the transaction is a foreign inward remittance.
• Information such as non-resident exchange house and initiating and recipient banks must be included by the
initiating bank in the electronic message before the money transfer. These documents should be maintained
by the recipient bank as per the provision in the rules mentioned under ‘Prevention of Money Laundering’ Act
2002. In case the recipient bank has any suspicions of fraud, the bank may ask for additional information and
report the transaction, if not satisfied.
This initiative is being considered as a strategy to strengthen India’s cross-border payments ecosystem. Moreover, it
will allow NRIs to pay recurring utility bills such as electricity, gas, water and FASTag, as long as all required conditions
are fulfilled.

38
9 RBIhttps://www.rbi.org.in/scripts/NotificationUser.aspx?Id=12386&Mode=0

25 PwC | The Indian payments handbook – 2022–2027

However, the success of BBPS for inward remittance 2. Individual partnerships: The NPCI would have to
faces multiple challenges: enter into multiple partnerships to expand the reach
of UPI.
• facilitating partnerships with institutions in different
3. Transaction disputes: Transaction-related disputes
countries
would be complicated to settle due to the immediate
• expanding the current utility bill offerings of BBPS completion of payments with foreign-exchange
• enabling a secure transfer policy with less lead time considerations.
and smooth operations If the challenges listed above are overcome, the UPI
• monitoring transactions for fraud and money infrastructure might be quite useful for cross-border
laundering payments. Making instant payments has become a
simple and efficient process in the country. Therefore, it
• partnering the NPCI with large banks. might potentially be used in collaboration with speedier
payments systems in other nations as well.
Once these challenges are addressed, the system will
surely bring in a large amount of remittance which will
help introduce more services into the BBPS category, 2. ONDC
thereby expanding the scope of payments. This will
create a consistent source of inward remittance for India, The ONDC is an initiative by the Government of India
and the volume will continue to grow as people keep to revolutionise e-commerce by creating a platform
migrating to various countries. that promotes local retailers to sell online and break the
monopoly of large marketplaces.
B. Partnerships with different countries on In the present market scenario, large e-commerce
UPI giants follow a marketplace model in which the listing of
sellers is decided by them. This creates an imbalance in
India has made considerable progress in developing the market which is unfavourable for small merchants,
the worldwide network of its UPI system. The NPCI local retailers or kirana shops trying to grow their online
International Payments Limited (NIPL) has formed businesses. Some of the common problems include
alliances with several nations to develop a massive massive discounting by burning cash, pre-decided seller
acceptance network for RuPay and UPI, allowing Indians listings and marketplace-owned inventories. Many small
to make payments through these channels from abroad, merchants belong to the unorganised sector – dealing
especially during foreign tours. with physical money and small revenue lines as they are
not able to scale their sales on e-commerce.
As per the circular published by the NPCI on 10 January
2023, UPI is now accessible to non-resident account Here, the ONDC can prove to be useful by enabling
holders with international mobile numbers across ten e-commerce businesses to move out of the current
countries. This means that NRIs who wish to use UPI model where few platforms decides on how the buyer &
in these countries would not need an Indian cell phone seller interact.
number, therefore benefiting students, families and local
businesses of Indian origins. By standardising product listing management, order
management, logistics, payments and commissions,
However, there are certain challenges which would have the ONDC will reduce the cost and increase the ease
to be addressed in order to ensure a seamless customer of doing business online for local sellers. Taking the
experience. business of local sellers on the e-commerce platform
will help small merchants to have access to orders
1. Transaction limits: UPI currently has a cap of INR from across the country and abroad, thus growing their
1 lakh on most domestic transactions and a higher businesses.
cap of INR 2 lakh on select transactions like capital
market investments, bill collections and insurance
payments. The lower limit has restricted UPI’s 3. CBDC
appeal for larger value/business-to-business (B2B)
payments. The payment limits in UPI would require A. The CBDC is a digital form of legal tender which
reconsideration as cross-border payments tend to is issued by a central bank and can be exchanged
have larger ticket sizes due to the exchange rates. with fiat currency. Central banks of many countries
are currently exploring CBDCs as it is a risk-free
and central bank-based asset which will gradually
streamline global payments services.

26 PwC | The Indian payments handbook – 2022–2027

In India, the RBI has chosen to opt for both retail and
wholesale CBDC for the pilot phase. Furthermore, an
intermediate approach – in which the RBI issues the
Challenges
CBDC to licenced intermediaries who then distribute it
further (similar to the cash distribution approach) – has a. Adoption of retail and wholesale
been taken. The CBDC would be non-interest bearing to CBDCs: As internet availability is
preserve parity with cash and eliminate competition with still a work in progress in some parts
bank-run interest-bearing deposits. Wholesale CBDC of the country, offline payments can
would be account-based, whereas retail CBDC would be
token-based. Finally, CBDC will keep anonymity just like
be explored to bridge this gap and
currency. make CBDC the go-to instrument for
cashless transactions.
The retail and wholesale CBDC pilots were started in
December 2022 and October 2022 respectively. As b. Strain on the balance sheet of
a part of the retail pilot, the RBI will cover only select central banks: People may choose to
locations, and the members participating will comprise
some customers and merchants in a closed group. The
obtain funds from banks and convert
learnings from this pilot will help in clearing the grey them into CBDC, thus forcing the
areas for stakeholders, bring more transparency, and central bank to issue liquid funds to
decrease the chances of failure in various stages of these banks.
implementation, usage and scaling.

Even though CBDC will be a game-

changer for the payments industry
Opportunities in India, factors such as unknown
legal frameworks and technology
a. Dependency on physical currency: requirements for scaling must be sorted
According to the RBI’s Digital out in collaboration with industry players
Payments Index, CBDC has great and stakeholders. Although the process
potential for adoption and growth in will be long and complex, it is necessary
the future to ensure the smooth implementation
and running of the instrument
b. Cross-border remittances: Wholesale
CBDC will prove to be instrumental in
decreasing the time between cross-
border transactions and settlement of
funds. Solutions for the same are being
explored by many central banks but
are currently in the pilot phase.

c. Reduction in costs of managing

physical currency: In FY 2021–22,
INR 4,984 crore was spent for secure
printing of banknotes. With the
adoption of CBDC, the printing and
circulation costs of physical currency
will reduce, thus bringing down the
overall expenses of managing the
same.

27 PwC | The Indian payments handbook – 2022–2027

B. Web 3.0: The third generation of web, Web 3.0, Benefits of Web 3.0
presents many opportunities in the financial
services industry. This development has enabled a. Cross-border payments: Traditionally,
the introduction of several financial products which cross-border payments involve
are not controlled by traditional financial institutions
a long and costly process for the
but are operated outside the financial system.
It has also provided opportunities for start-ups customer while being a major revenue
and other financial institutions to grow with the generator for banks. The adoption
help of advanced centralised and decentralised of Web 3.0 will improve the speed
infrastructures. and lower the transaction costs, thus
Major applications of Web 3.0 for payments are increasing efficiency and facilitating
cryptocurrency, decentralised finance (DeFi) and the a robust network that eliminates
metaverse. multiple stakeholders from processing
1. DeFi: The system of DeFi has evolved to eliminate transactions. This will result in enhancing
intermediaries like banks and other banking service the security of transactions.
providers, and provide a free and fair financial
opportunity to all – given that the consumer has b. Better banking experience: The user
internet access. The system uses blockchain interface of Web 3.0 will provide a more
technology to ensure a safe and a smooth user immersive, persistent and interactive
experience for all consumers. version of the payment ecosystem. This
2. Cryptocurrency: Cryptocurrencies are decentralised will enhance the mobile and internet
currencies in a digital form which operate without banking experience for users. It will also
any governmental intervention in terms of operations
provide complete ownership of data
or transactions. Cryptocurrency can be supported
by DeFi, as digital banks can utilise DeFi elements to the customer, thereby increasing
to empower consumers to transact and obtain transparency and security, and earning
cryptocurrencies as it eliminates the intermediaries customers’ trust.
and is a safe way to transact.
3. Metaverse: The objective of the metaverse is to
c. Secure and uninterrupted service:
provide a virtual reality experience to consumers With P2P communication, security
to boost businesses. Banks have already started management in Web 3.0 is more
to invest in and expand the applications of the distributed. Therefore, access to any
metaverse. A PSU bank from India has announced information requires consensus from all
the launch of a virtual lounge which will offer
bank-like facilities to the customer virtually. Other
the key stakeholders. In addition, Web
applications and use cases of the metaverse can 3.0 will have no single point of failure
include virtual customer onboarding and enabling that results in a reduced service denial.
use of tokenised assets like non-fungible tokens for This is because the distributed nodes will
making payments. eliminate the need for multiple backups,
and prevent server failure and help in
hassle-free payments processing.
Web 3.0 is expected to bring in great
opportunities which will allow consumers
to explore new efficient and cost-
effective payments options. However,
there is still a long way to go as factors
like data validation, accessibility and
scalability need to be addressed – along
with approval and validation from the
Government – before developing it
further to facilitate payments.

28 PwC | The Indian payments handbook – 2022–2027

C. Implementation of blockchain: In recent years, the Use cases
payments sector has embraced a slew of innovative
technologies to streamline payments processes. a. Cross-border payments
Of these, blockchain follows the principles of Blockchain-based payments mechanisms
secure financial transactions and decentralisation. can offer faster transaction times with lesser
Blockchains serve as a shared database, distributed expenditure.
across vast P2P networks, with no single entity
owning a blockchain network or being able to modify b. Digital identity verification and KYC
the same without the consensus of its peers. process
The ‘National Strategy on Blockchain’, released by the Post-COVID-19 practices have shifted from
Ministry of Electronics and Information Technology physical verification to e-KYC via video calls.
(MeitY), Government of India, is a step towards allowing In the era of customers holding multiple accounts
the development of trustworthy digital platforms and in different banks, multiple e-KYC checks can
blockchain frameworks to create useful applications. be a hassle and should be avoided. However, at
The document highlights the challenges and concerns present, customers cannot reuse KYC done by
in addition to the mechanisms that will need to be one bank for other banks and need to repeat the
deployed for the creation of the National Blockchain process.
Framework.
With blockchain-based payment options, a
customer will only need to go through the
Value proposition
procedure once. This will also eliminate the
According to the World Economic Forum (WEF), 10% of security issue – with customers being able to
the global GDP will be stored on blockchain by 2025.39 rely on the bank storing their data securely on
Blockchain is expected to generate major savings by a platform which is decentralised and has high-
reducing the number of intermediaries and the effort security protocols in place.
required for administrative activities.
c. P2P transfers
Blockchain in payments As blockchain use will eliminate the need for
intermediaries, the limitation of area-based
Blockchain technology was primarily developed to
payments will also be removed. This will promote
support the digital currency Bitcoin, but it is currently
money transfer from and to anywhere in the world
being investigated for a variety of other purposes.
using blockchain technology.
Blockchain offers various advantages to the payments
industry – eliminates intermediaries and facilitates quick
d. Anti-money laundering solutions
cross-border payments and self-paying contracts with
high security and transparency. Blockchain can assist banks in avoiding money
laundering frauds by detecting these activities
during the initial phase of the transaction. This
4. Superapps and embedded is because every transaction on the blockchain
finance produces a permanent trail of data that cannot
be changed, which makes it easier to trace the
origins of such unauthorised transactions. In
Superapps case the destination account and other details
Superapps are a one-stop solution that offers a bundle like the amount and departure account are not
of services like fashion, entertainment, travel and food. verified, the money will not get transferred and
Superapps have an inbuilt payments system specific the transaction will be blocked.
to a single or multiple service providers. In India, the
development of superapps is still at a very nascent
stage. However, in future, it is expected to gather pace
and expand to the payments industry as well.

39 https://www.niti.gov.in/sites/default/files/2020-01/Blockchain_The_India_Strate-
gy_Part_I.pdf

29 PwC | The Indian payments handbook – 2022–2027

Many banks and financial institutions are competing to
provide a one-stop digital app for all of their consumer’s 5. 5G, 6G, the internet of things
financial requirements. This will enable banks to receive
a higher customer footfall and acquisition, which will (IoT) in payments
further boost customer brand loyalty. On the other hand,
some financial partners have chosen to collaborate with In today’s industrial landscape, it is crucial to stay
strategic partners from e-commerce and other industries updated with the rapid technological advancements.
to create superapps. Technologies like 5G, 6G and IoT can then be leveraged
to enable industry players to improve processes and
Embedded finance serve customers in an efficient manner.
Embedded finance is one of the fastest-growing
segments of the FinTech industry. Owing to the rapid IoT is a technological framework that allows networked
adoption of new technology and payments options in the objects to gather real-time data, send it to the cloud for
country, the growth of embedded finance is expected processing and analysis, and respond to events in real
to be significant in the near future. From the service time. IoT has huge ramifications for the banking and
provider’s point of view, the user-friendly interface of financial sectors since it allows for the digital automation
new platforms contributes to consumer stickiness, which of essential procedures, improves data collecting and
drives repeat purchases. With more information about processing, and increases overall security.
the consumers, businesses may be able to serve them
better by offering customised items, resulting in higher Faster transaction times and less engagement will
conversion rates for online stores/sites. benefit both customers and industry players, as the
former will be willing to pay a premium for a seamless
Embedded finance has created new avenues for experience. In addition, as more data gets accumulated,
growth – for instance, online payments alternatives AI algorithms and supporting systems will analyse this
at the PoS, where clients have the choice of paying data to offer a personalised experience to customers.
via digital wallets, net banking and credit/debit cards.
Similarly, there are many applications in insurance, With the ongoing roll-out of 5G, the next generation of
such as luggage insurance while buying flight tickets. telecommunications development was kickstarted with
Lending options like BNPL and EMI are also being the announcement of the Bharat 6G Vision Statement.
offered by many service providers to customers. In India, An apex council was appointed to look after the finances
the largest online trucking platform has also adopted and implementation of the project. The project will be
embedded finance for all its truckers for dealing with implemented in two phases. The first phase from 2023 to
their pain points such as toll payments and refuelling. 2025 will explore ideas and concepts, while the second
This shows that industry players have widened the phase will focus on the development of the concepts
scope of their offerings by extending beyond mass formulated in phase 1 and establish use cases for the
consumers and venturing into other niche sectors. same and be completed by 2030. This development will
boost the customer experience with better connectivity
Banking and finance have long been restricted to a small and speed.
number of industries while being vital infrastructures
for commerce, business and economic prosperity. The
move by new-age FinTechs to provide services like
embedded finance to other traditional businesses is a
significant change. The future of embedded finance is
intimately tied to the creation of a policy infrastructure
that incorporates regulatory norms into the procedures
and gives institutions room to innovate since doing so
will help to better integrate customers into the financial
services ecosystem.

30 PwC | The Indian payments handbook – 2022–2027

Use cases
a. Smart homes
This can open new business opportunities for
organisations. Smart appliances automatically
send out repair or maintenance calls into your
systems, reminding your clients to confirm the
appointments and automatically charge their
account after the service ticket is closed. Similar
applications can also be developed for ordering
essential items – for instance, refrigerators can be
installed with trigger systems that can generate
a list of items to buy and prompt the customer to
approve the same with a single click.

b. Brick-and-mortar stores
The COVID-19 pandemic was the key reason
for the exponential growth of, e-commerce
platforms. However, as e-commerce players are
slowly opening brick-and-mortar retail stores in
cities, the latter is also gaining prominence. The
idea behind implementing IoT in brick-and-mortar
stores can be implemented by using an array of
cameras and sensors to allow consumers to buy
off the shelf and automatically bill their items on
the way out. As traffic in retail outlets in India
approaches pre-COVID-19 levels, the industry
appears primed for such revolutionary shifts in
buyer experience.

The 5G mobile network is a cutting-edge wireless

technology that provides low-latency, dependable
connectivity. The deployment of 5G networks has
the potential to considerably assist the banking
industry by improving the efficiency of websites
and apps. This is, in part, due to 5G networks’
enhanced speed and capacity, and because of
the storage of data on the cloud.

The security will also be enhanced as companies

will be able to monitor and, if required, send out
security updates or timely improvements to the
application. 5G will also support the expanded
usage of multimodal biometric security methods
to validate the identity of mobile users. However,
all these functionalities will result in a high
acquisition cost for network companies, thus
increasing costs for both customers and financial
institutions.

Despite the early difficulties and uncertainty, the

benefits to businesses of all sizes and customers
are far more than the investments required in
5G and IoT. With the right use of security best
practices and adoption strategy, 5G and IoT-
enabled digital payments can be one of the
foundations underpinning India’s economic
threshold.

31 PwC | The Indian payments handbook – 2022–2027

Conclusion
India’s digital payments growth journey in the last six to eight years has been phenomenal and is considered as
a case study globally. This growth has helped the country to move forward from being cash dependent to a less
cash economy, focusing on digital-first transactions in metros, tier 1–4 cities and rural areas. In the coming years,
it is expected that digital payments will further penetrate the Indian economy across all customer demographics,
covering newer use cases and deepening existing businesses. Transaction volumes in retail digital payments
covering various instruments is expected to grow by four times by FY 2026–27.
UPI is the flagbearer of the digital payments revolution, constituting over 75% of the overall transactional volume
in retail digital payments in India. With addition of new features and use cases, UPI is expected to cross 1 billion
transactions per day by FY 2026–27. UPI 123PAY and UPI Lite are expected to increase the adoption of digital
payments in rural areas. UPI for foreign tourists, UPI linkage to credit accounts and tie-ups with real-time payments
systems of other countries will further increase the foreign inward remittance.
India is becoming a credit-friendly market with the introduction of products like credit card linkage to UPI,
innovations in credit card products and banks focusing on bring in new credit card offerings. Credit cards show a
promising growth in future, with the transaction volumes expected to grow by three times by FY 2026–27 due to new
players coming up in this space. Opening up the Indian market to credit has been well balanced by the conservative
approach to mitigate elements of credit risk (by closely monitoring market behaviour), offering new products –
covering new to credit and credit card segments – and also creating awareness about the pros and cons of these
products.
A key trend observed this year is the formalisation of financial institutions (NBFCs and FinTechs) into the payments
ecosystem by receiving in-principal approvals and licences from the RBI. Their inclusion is going to be crucial for
the market, as it would benefit from the technology expertise and fresh business perspectives offered by these
institutions.
The initiatives taken by the NPCI in last few years to take Indian indigenous payments products to global markets
have also been noteworthy. The acceptance of UPI and RuPay cards in foreign global markets has made other
countries appreciate the innovations made by India and created new use cases of transacting digitally. These
initiatives will ease the transaction experience of international travellers and that of the nearly 20 million NRIs residing
abroad.
Lastly, India has moved ahead of the stage where incentives, cashbacks and rewards acted as a catalyst to
encourage users to transact digitally. We have observed that Indian customers are now habituated and more
comfortable with digital transactions. This trend is expected to continue and grow in the future. This has been
made possible due to the dedicated focus of the Government and regulator and the efforts of all operators and
stakeholders in the payments ecosystem, who have enabled a safe, convenient and easy-to-use experience for
customers.

32 PwC | The Indian payments handbook – 2022–2027

Contact us
Vivek Belgavi Editorial support
Partner and Leader, Financial Services Technology, Alliances
and Ecosystems and Cloud Transformation Rubina Malhotra
PwC India Rashi Gupta
vivek.belgavi@pwc.com

Mihir Gandhi Design

Partner and Leader, Payments Transformation
PwC India Kirtika Saxena
mihir.gandhi@pwc.com

Geetika Raheja
Executive Director, Payments Transformation
PwC India
geetika.raheja@pwc.com

Zubin Tafti
Executive Director, Payments Transformation
PwC India
zubin.tafti@pwc.com

Contributors:
Kanishk Sarkar
Senior Manager, Payments
Transformation
PwC India

Tanmay Bhatt
Manager, Payments
Transformation
PwC India

Dipankar Duttagupta
Senior Consultant, Payments
Transformation
PwC India

Shyam Patel
Consultant, Payments
Transformation
PwC India

33 PwC | The Indian payments handbook – 2022–2027

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