India to become 50% non-cash economy in consumption in 3 years

India is predicted to become a 50 per cent non-cash economy in consumption in the subsequent three years, with person-to-merchant digital transactions reaching over $1.5 trillion by FY26, a report confirmed on Thursday.

India’s family consumption is predicted to attain greater than $3 trillion by FY26, largely propelled by the upper-middle and high-income segments, with UPI funds probably making up a good portion at round $1 trillion person-to-merchant (P2M) funds, in accordance to the report from Bain & Company.

“With the present technical and monetary momentum, India is predicted to become a virtually 50 per cent non-cash economy in consumption in the subsequent three years with roughly 350-400 million digital shoppers,” mentioned Saurabh Trehan, Partner and Leader of the Financial Services (FS) apply, Bain & Company.

This progress might be additional propelled to 60-75 per cent in case of continued authorities incentives and better traction for UPI 2.0, 123 Lite, credit score on UPI, Central Bank Digital Currency (CBDC), he added.

UPI has seen an exponential progress in current years, with its whole annualised transaction worth reaching up to $1.7 trillion and its P2M transactions climbing to $380 billion (in FY23), virtually twice the quantity of bank cards.

This progress is predicted to proceed at a CAGR of 40-50 per cent, the quickest amongst fee modes, on the again of speedy service provider acceptance and adoption given zero/low service provider low cost price (MDR), growing web penetration, and wider consciousness of digital fee strategies.

Additionally, new improvements like credit score on UPI, UPI 123 Pay, UPI Lite, and UPI coin merchandising machines are anticipated to additional speed up the adoption, the report talked about.

Embedded finance has gained large traction with bank card and Buy Now Pay Later (BNPL) transactions at present accounting for almost 8 per cent of whole consumption. By FY26, that is anticipated to develop to round 12-13 per cent of consumption.

Credit card spends in India are anticipated to develop roughly 2.5 occasions to attain round $270-$280 billion by FY26 from its present $100-$110 billion in FY22, mentioned the report.

It is predicted that the variety of bank cards in circulation will attain roughly 135-140 million by FY26.A

“CBDC, a non-interest-bearing digital forex, might be a game-changer for low ticket transactions, particularly in semi-urban and rural areas with restricted web connectivity,” the report talked about.

However, overcoming challenges corresponding to KYC verification, offline entry, safety, value, and compliance will play an essential position in adoption, it added.

(With inputs from IANS)