UPI Boom Slowing? Credit Cards Poised to Drive Next Wave of Digital Payments: PwC Report

The Unified Payments Interface (UPI), which is on track to clock 1 billion transactions per day by FY28 from around 500 million in FY25, is showing signs of saturation, said a report by PwC on Wednesday. Leading retail payments and accounting for around 90 per cent of transaction volumes, UPI needs newer use cases and infrastructure upgrades to sustain its momentum, the report said, underscoring that enabling credit lines through UPI and allowing customers to link RuPay credit cards on UPI may further boost transaction volumes and help drive momentum.

“Even with UPI achieving 1 billion transactions in the next three years, the current growth rates mark a substantial departure from its hyper-growth phase also due to the base effect. There has been a decline in growth when compared to the initial years, and this is expected to continue in the future,” the report, Indian Payments Handbook 2025-2030, said.

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It also noted that this decline further accentuates the fact that UPI may be approaching a saturation point, signalling a critical juncture demanding the introduction of innovative use cases to sustain momentum and broaden its applicability.

According to a survey, part of the report, of over 175 individuals in the payments and fintech space, cross-border transactions and credit-based services are the most promising areas for UPI expansion. There’s also notable interest in government disbursements and business payments, suggesting UPI’s potential to evolve beyond peer-to-peer transactions into a comprehensive financial ecosystem.

However, it is not UPI but credit cards that will spearhead the next wave of transformation in the digital payments landscape, with 65 per cent of respondents identifying them as the leading mode of growth.

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According to the report, credit cards are witnessing robust growth, with volumes and values projected to grow at 21.7 per cent and 20.8 per cent CAGR, respectively, reaching around 13 billion transactions totalling Rs 54 trillion by FY30.

Further, the number of transactions per card each year is anticipated to gradually increase from 43 to 61, while annual spending per card is projected to reach Rs 2.58 lakh, growing at a CAGR of 6.1 per cent. 

The average ticket size is expected to remain stable at around Rs 4,200, with downward pressure from credit card transactions on UPI and upward pressure from inflation, according to the report.