Non-cash payments’ share to grow to 65% of all transactions by 2026 from current 40%: Report
   Date :03-Jun-2022

Non-cash payments 
 
 
 
Business Bureau
Non-cash payments using modes like UPI will account for 65 per cent of all the transactions by 2026 against the 40 per cent level estimated at present, a report said on Thursday.
The report -- which comes amid a rapid rise in unified payments interface (UPI) since the onset of the COVID-19 pandemic over two years ago -- also said that the digital payments industry will be USD 10 trillion opportunities by 2026 against USD 3 trillion at present.
Consultancy firm BCG and leading third-party UPI services provider Phonepe have come out with the report, which also projects that UPI adoption will surge to 75 per cent of the population in the next five years from the 35 per cent level at the end of FY21.
The consultancy’s Managing Director Prateek Roongta said merchant payments will drive the growth in adoption of non-cash or digital transactions to 65 per cent from the present 40 per cent levels.
The report estimated a seven-fold growth in merchant payments to USD 2.5-2.7 trillion by 2026 against the present USD 0.3-0.4 trillion, which will drive the overall non-cash volumes growth.
“We will also witness the progression from embedded payments to embedded finance. As more and more merchants begin to accept digital payments, it will unlock a significant change in access to credit for small merchants due to the creation of a digital transaction trail,” Roongta said.
The next wave of growth is likely to come from Tier 3-6 locations, as evidenced in the past two years. The report also advocated for a “sustainable merchant discount rate” to incentivise the players in the ecosystem and ensure that they are encouraged to drive merchant acquisition and push digital payments.