Indian households to make over 50% non-cash transactions by FY26: Redseer

Redseer Strategy Consultants today released a report titled ‘Future of Online Payments’ in collaboration with Plural by Pine Labs. The report highlights growth projections for the forecast period FY23-26 and shares insights on segments like UPI, Bharat Bill Payment System (BBPS), Embedded Finance, and e-commerce.

• 85% of businesses in India will be digitally enabled by FY26.

• Indian households make ~35% transactions digitally; expected to cross ~50% by FY 26.

• Online shoppers in India are expected to grow by 50% in the coming three years to exceed 30 Cr users by FY26.

• Customers from Tier-2 and smaller cities will drive major growth of e-Commerce, which is expected to reach ~INR 900 Cr by FY26.

• UPI will constitute 90% of total digital payments and also fuel BBPS (Bharat Bill Payment System) by simplifying recurring payments for businesses, by FY26.

Bangalore: According to a report released by strategy consulting firm Redseer Strategy Consultants in collaboration with Plural by Pine labs, 85% of the businesses in India will be digitally enabled by FY26. From bustling cities to remote villages, digital payments are on the fast track to change the way users transact. Penetration of smartphones and the internet, and favorable government policies have been key drivers in the adoption of digital payments in the country. With more than 70 crore internet users, India has the second-highest number of internet users in the world, trailing only behind China. With a population of 140 Cr, India is poised to become a global leader in digital payments in the coming years.

Commenting on the report, B Amrish Rau, CEO, Pine Labs said, “From the foundational work on the JAM trinity to the development of India Stack, India has quietly orchestrated a revolution in online payments. These insights coming from the Redseer analysis especially on the BBPS and UPI adoption are a tell-tale sign of things to come. The future is increased tech-enabled digitization at the online and offline point of sale and at Pine Labs we are happy to be playing a part in it.”

According to the report, the rise of first-time e-Commerce users during the COVID years accelerated the adoption of digital payments. The Indian e-Commerce market, which is currently at ~ INR 400K Cr, is expected to reach ~INR 900K Cr by FY26, with customers from Tier-2 and smaller cities driving most of this growth. Jasbir Juneja, Partner at Redseer, further adds, “Our research suggests that online shoppers in India are expected to grow by 50% in the coming three years to reach >30 Cr by FY26, further paving the way for the reach of online payments in the country”.

Indian households make ~35% of transactions digitally, with Pay-to-Merchant payments (P2M) accounting for a significant proportion of transactions. Customers use digital payment methods in 80% of grocery, food delivery, and travel transactions. With mobile phones facilitating seamless P2M payments, digital transactions by households are estimated to cross ~50% by FY26.

As more customers have adopted digital payments, businesses have also responded by leveraging technologies to enable digital transactions. The report estimates that ~75% of the ~7 Cr businesses in India are digitally enabled, and the number is expected to rise to 85% by FY26. UPI captures the biggest share of the payments market, accounting for 84% of the total digital payments volume as of FY23. BBPS, an ecosystem facilitating various bill payments, is set to witness a compound annual growth rate (CAGR) of approximately 30% between 2023 and 2026.

Financial products and services such as embedded credit, embedded insurance, and embedded finance can increase business revenue, reduce the cost of customer acquisition, smoothen customer journeys, and provide a competitive edge.

The RBI conceptualized payment system, BBPS driven by National Payments Corporation of India (NPCI) also finds a mention in the Redseer report. As per the Redseer findings, BBPS is poised to witness a 30% increase in transaction volumes and increase from 110 crore transactions in FY23 to 240 crores by FY26.

The report concludes with emerging trends to look out for, such as e-Rupi/CBDC, voice payments, wearable payment devices, and biometric payments, which could further foster greater collaboration between fintech companies, businesses and the government.

To View the complete report, click here. https://shorturl.at/asRV6

About Redseer:

Redseer Strategy Consultants is India's largest and renowned strategy consultancy firm with a global footprint. Founded in 2009, Redseer collaborates with leaders and organizations to build thriving digital businesses. Using proprietary methodologies, deep consumer understanding, high-quality research, and an entrepreneurial mindset, Redseer offers unparalleled solutions in private equity, growth advisory and consumer research. Headquartered in Bangalore, Redseer has a strong team of 200+ consultants in India and around the world.

Contact Information

Vidyashree Srinivas

+91 8999964456, vidyasshree@redseerconsulting.com

About Pine labs:

Pine Labs is a leading merchant commerce omnichannel platform operating across India and Southeast Asia. Pine Labs’ tech-first approach to digital payments and focus on simplification at the front end aims to help many businesses embrace fintech products at scale.

In digital payments, our online payments cloud-based software Plural represents a one-stop payments destination across channels. Plural is designed to deliver secure and frictionless online payment experiences to the end user, powered by an advanced tech stack that can augment an existing online business or build an all-new e-commerce payment setup from the ground up.

Our Issuing business is powered by Qwikcilver – a proprietary and industry leading prepaid, stored value and gift card issuance, processing and distribution solution. Qwikcilver is the platform of choice for leading enterprises including merchants, brands, e-commerce companies across categories in India, Middle East and Australia powering embedded issuing solutions that bolster sales, acquire and retain customers, drive operational efficiencies and improve cash flows.

In consumer app, Fave is a fintech platform for the next generation of consumers, providing smart payments and savings, while empowering merchants with a loyalty solution to grow and engage with their customers in a whole new way.

Incorporated in Singapore, the key investors of Pine Labs include Sequoia India, Actis Capital, Temasek, PayPal and Mastercard. To know more, please visit www.pinelabs.com.

About Plural:

Plural was launched by Pine Labs in October 2021 to provide online payments solutions to businesses. Plural’s products include payment gateway, affordability suite, payment links, card tokenization, subscription solutions, banking, payouts and more.

Media Contact:

Swati Chauhan

Ruder Finn Asia

+91- 8505947705, chauhans@RuderFinnAsia.com