The Rise of Digital Payments: India’s Path to a Cashless Future

According to a report by Redseer Consultants and Pine Labs, the digital payment ecosystem in India has witnessed significant growth in recent years, and this trend is expected to continue until FY26. In comparison to the current 35% of payments done through digital channels, the survey predicts that Indian households would make about half of their payments digitally within the next three years.

All About the Digital Payments Report!

The report highlights that customers are increasingly using digital payment methods for grocery shopping, food delivery, and travel transactions, accounting for approximately 80% of such transactions. With the ease of mobile phones enabling seamless peer-to-merchant (P2M) payments, it is estimated that digital transactions by households will reach approximately 50% by FY26.

FY26 is predicted to be a landmark year for digital payment adoption in India. By FY26, it is anticipated that 700–750 million consumers would have transacted online, up from the current 400–450 million. Furthermore, the report indicates that the number of unique mobile payment users utilizing UPI or digital wallets is expected to nearly double from the current 350-380 million to 650-700 million within three years.

UPI has gained widespread acceptance as the most popular digital payment method, with PhonePe, Google Pay, Paytm, and Cred accounting for over 95% of the market share, as stated by Redseer. The growth of digital payments is significantly driven by the surge in online retail, as more people are opting for online shopping. Even in non-metropolitan areas (referred to as Bharat), there is increasing adoption of digital payments, further bolstering the reach of online transactions in the country.

Redseer partner Jasbir Juneja explains that their research indicates a projected 50% increase in online shoppers in India over the next three years, surpassing 300 million by FY26. Food delivery and mobility services, including ride-hailing platforms, are other popular sectors where digital payments are extensively used.

Additionally, businesses are also embracing digital payments, with approximately 75% of the 70 million businesses in India currently being digitally enabled. This figure is expected to rise to 85% by FY26, showcasing the growing acceptance of digital payment methods among enterprises. Overall, the report suggests a promising future for the Indian digital payment landscape, driven by increased consumer adoption, expanding online retail, and growing digitalization among businesses.