India UPI Payment Market

The India India UPI Payment Market is valued at USD 1.3 Trillion in 2023 and is projected to reach a value of USD 3212.8 Trillion by 2032 at a CAGR (Compound Annual Growth Rate) of 138.2% between 2024 and 2032.

Key highlights of India UPI Payment Market

• India India UPI Payment Market will witness remarkable growth during the forecast period,
• Peer-to-Peer (P2P) payments segment dominated the market with a significant market share in 2023,
• The Money Transfer segment continued to assert its dominance by technology, capturing the largest market share in 2023,
• Domestic dominated the market with a significant market share in 2023
• The emergence of fintech companies offering innovative UPI-based solutions, along with the interoperability and security provided by the National Payments Corporation of India (NPCI), further fuel the expansion of the India UPI Payment market, making it a preferred choice for both consumers and businesses.

India UPI Payment Market: Overview

India's India UPI Payment market remains the most mature and dominant, fueled by widespread smartphone adoption and a burgeoning fintech ecosystem. For instance, In March 2023, PhonePe, Google Pay, and Paytm collectively dominated the UPI transactions landscape, accounting for almost 96% of the total transaction value. PhonePe maintained its lead as the top UPI app, processing a staggering 407.63 crore transactions amounting to INR 7.07 lakh crore. Google Pay held onto their respective second and third positions. Additionally, Amazon Pay's performance propelled it past CRED to secure the fourth spot in terms of transaction volume, reflecting the intense competition among leading UPI platforms. According to a report in September 2023, PhonePe emerged as the leader in India's Unified Payment Interface (UPI) market, commanding a market share exceeding 47%. Google Pay followed with 35.8%, and BHIM trailed behind with a mere 0.2% share.

The Indian India UPI Payment market is also being driven by strong government support. For instance, In 2023, the government allocated a provisional amount of Rs 1,500 crore to promote digital payments. With the increasing momentum of UPI transactions, industry experts anticipate that this provisional allocation will be revised upwards to a higher figure.

The Indian India UPI Payment market is also being driven by strong government support. For instance, in 2023, the government allocated a provisional amount of Rs 1,500 crore to promote digital payments. With the increasing momentum of UPI transactions, industry experts anticipate that this provisional allocation will be revised upwards to a higher figure.

The India India UPI Payment market can be categorized as Type, Application, Transaction Type, Vertical, and Region.

India UPI Payment Market: Type Overview

In 2023, the Peer-to-Peer (P2P) payments segment dominated the market with a significant market share. The India UPI Payment market, segmented by type, includes Peer-to-Peer (P2P) payments, Peer-to-Merchant (P2M) payments. This segment encompasses transactions between individuals, such as friends or family members, for personal reasons like splitting bills or sending gifts. P2P payments often account for a significant portion of overall UPI transaction volume due to their widespread use among consumers for everyday financial activities. For instance, in 2023, CRED has introduced peer-to-peer (P2P) UPI payment services. Scan & pay, which allows customers to "pay anywhere" using UPI, has made the new payment method available.

India UPI Payment Market: Application Overview

In 2023, the Money Transfer segment accounted for the largest market share. The application segment is divided into Money Transfers, Bill Payments, Point of Sale, and Others. Money transfer encompasses peer-to-peer (P2P) transactions, including sending money to friends, family, or other individuals, and business-to-business (B2B) transactions, such as salary payments or vendor payments. This segment accounts for the largest portion of overall UPI transaction volume due to its widespread use for various financial activities, including remittances, bill splitting, and other personal or business-related transfers. For instance, as of February 2024, residents of Singapore and India gained the ability to instantly transfer money between each other using UPI and PayNow, respectively, due to a cross-border real-time payment systems linkage initiated by the Reserve Bank of India (RBI) governor and the managing director of the Monetary Authority of Singapore (MAS). This development enables seamless transactions between the two countries, allowing individuals in India to engage with counterparts in Singapore through payment applications connected to a mobile phone number utilizing the UPI interface, such as Google Pay. While bill payments, point-of-sale transactions, and other use cases contribute to the UPI market, money transfer remains the primary driver of transaction volume and adoption.

India UPI Payment Market: Transaction Type Overview

The Domestic segment accounted for a substantial market share in 2023. The Transaction Type segment is divided into Domestic and International. Domestic transactions refer to payments made within the same country, where the sender and receiver are located domestically. This segment includes peer-to-peer (P2P) payments, peer-to-merchant (P2M) payments, bill payments, and other transactions conducted within the domestic market. For instance, In January 2024, the National Payments Corporation of India (NPCI) announced a remarkable milestone, with Unified Payment Interface (UPI) transactions reaching a record-breaking figure of Rs 18.41 trillion. This achievement represents a significant surge of 52% in volume and a 42% increase in value compared to the corresponding period in the previous fiscal year, underscoring the robust growth and widespread adoption of UPI transactions in India. While cross-border transactions are also important, domestic transactions typically account for the majority of UPI transaction volume due to the larger volume of transactions conducted domestically compared to cross-border transactions.

India UPI Payment Market: Vertical Overview

The Retail & E-commerce segment accounted for a significant market share in 2023. The vertical segment is divided into BFSI, Retail & E-commerce, IT & ITeS, Telecom, Healthcare, Travel & Hospitality, Transportation & Logistics, Media & Entertainment, and Others. This segment encompasses transactions related to retail purchases, online shopping, and e-commerce activities conducted by individual consumers. As online shopping and digital commerce continue to grow in popularity, the volume of UPI transactions within the retail and e-commerce sector increases correspondingly, making it one of the primary drivers of transaction volume in the UPI Payments market.

Key Trends

• The increasing prominence of mobile apps for shopping transactions is anticipated to exert a significant favorable influence in the foreseeable future. Due to the rising prevalence of smart devices, online shopping transactions predominantly occur through mobile apps, and vendors are transitioning towards app-exclusive services to capitalize on this trend. Mobile payments, including those facilitated by UPI, are experiencing accelerated growth in India, driven by heightened consumer adoption.
• The COVID-19 pandemic has rushed the adoption of contactless payments, with UPI witnessing a surge in transactions as consumers and businesses prioritize safety and hygiene. This tendency is anticipated to continue after the pandemic, with many people choosing contactless UPI payments as their preferred payment method.
• With the rise in digital transactions, there is a growing emphasis on enhancing security measures and fraud prevention mechanisms within the UPI ecosystem. Stakeholders invest in state-of-the-art technologies such as biometric authentication, multi-factor authentication, and AI-based fraud detection systems to safeguard user data and prevent fraud.

Premium Insights

UPI's simplicity of use and convenience, which enables users to send and receive money instantly via smartphones without using cash or credit cards, has greatly increased its appeal. Furthermore, the growing use of smartphones, internet access, and government initiatives promoting digital payments have propelled UPI's appeal across many demographic segments.UPI is gaining traction in Africa as a competitive alternative to traditional banking methods, particularly in countries where internet and smartphone penetration is increasing. Additionally, regions such as Europe and North America are interested in UPI-based payment innovations, although adoption levels vary based on regulatory frameworks and existing payment infrastructures.

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Market Dynamics

The seamless and immediate money transfer process offered by UPI payments drives the India UPI Payment Market

Built on the IMPS platform, UPI allows users to execute transactions anytime and from any location, unbound by holiday restrictions or odd hours, ensuring uninterrupted service even during bank strikes. Moreover, UPI distinguishes itself by enabling instant registration alongside instantaneous fund transfers, a feature notably absent in traditional methods like NEFT and IMPS, where a cooling period ranging from 30 minutes to 24 hours is typically mandated post-registration. By eliminating this registration requirement for payments and allowing users to add a beneficiary UPI ID, UPI fosters unparalleled convenience and efficiency, factors poised to fuel market expansion significantly in the forecast period.

UPI payment frauds pose a significant challenge to India's India UPI Payment market

The creation of deceptive UPI handles mimicking trusted entities like NPCI and BHIM, leading unsuspecting users to divulge sensitive account information. Another tactic involves manipulating users into scanning fraudulent QR codes or disclosing their UPI PIN under pretenses, resulting in illicit transactions. Additionally, phishing attacks via unauthorized links in emails or SMS messages exploit users, facilitating unauthorized fund transfers. As UPIs gain widespread adoption and usage across diverse sectors, combating fraud becomes paramount to sustain market growth and ensure the continued success of digital payment initiatives in India.

Competitive Landscape

The India UPI Payment market is diverse and competitive, comprising traditional banks, fintech companies, technology giants, and government-backed entities. Leading banks like SBI, HDFC Bank, and ICICI Bank offer UPI services through mobile apps. At the same time, by offering user-friendly interfaces and value-added services, fintech companies like PhonePe, and Google Pay have taken a significant portion of the market.

Global technology players like Google and Amazon have also entered the fray, leveraging their expertise and user base to offer UPI-based payment solutions. NPCI, the governing body behind UPI, ensures interoperability and security standards, while telecom operators like Jio and Airtel offer UPI services through their payment banks. Additionally, startups and emerging players contribute to the ecosystem with niche offerings and innovative solutions, making the UPI payments market dynamic and evolving.

The key players in the India India UPI Payment market include - Axis Bank Ltd., Bank of Baroda, Bharti Airtel Ltd., Central Bank of India, Dreamplug Technologies Pvt. Ltd., HDFC Bank Ltd., ICICI Bank Ltd., Kotak Mahindra Bank Ltd., One MobiKwik System Pvt. Ltd., One97 Communications Ltd., Reliance Industries Ltd., South Indian Bank Ltd., State Bank of India, Union Bank of India ,Yes Bank among others.

Recent Market Developments

• In January 2024, Google India Digital Services signed a Memorandum of Understanding (MoU) with NPCI International Payments (NIPL), a wholly-owned subsidiary of the National Payments Corporation of India (NPCI), to bring the revolutionary effects of the Unified Payments Interface (UPI) to nations outside of India.
• In 2023, To enable international e-commerce payments via UPI, NPCI International Payments, a wholly-owned subsidiary of National Payments Corporation of India (NPCI), partnered with PPRO, a provider of digital payments infrastructure.