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If we look at the latest data, the transaction volumes have grown by 42% year-on-year (YoY) in FY 2023-24.A report by PwC predicts that transaction volumes are set to rise from 159 billion in FY23-24 to 481 billion by FY2028-29.
Here are key trends shaping the future of digital payments in the country.
Growth of Bharat Connect (BBPS) and B2B payments
The Bharat Bill Payment System (BBPS) has been expanding rapidly, with over 22,000 billers already onboard. This number is expected to grow significantly, bringing in more billers and categories, along with a surge in transaction volumes.
One of the key developments is the NBBL Bharat Connect platform, aimed at streamlining B2B payments and offering credit access to India’s 6.3 crore MSMEs.
“This system will change the way businesses manage payments, making transactions faster and more efficient,” Rohit Mahajan, Co-Founder of PlutosOne, explains.
Founded in 2022 by Rohit Mahajan and Rajjat Gulati, PlutosOne is a technology-driven company that provides a full range of licences and end-to-end services to improve digital payment infrastructure.
Additionally, the rise of Fastag is notable. By 2025, Fastag is expected to exceed 100 million active users, with over one billion toll transactions per month. “This growth highlights how digital payments are becoming an integral part of everyday transactions,” Mahajan adds.
AI solutions for fraud prevention
As digital payments continue to rise, security remains a critical concern. AI-powered solutions, including natural language processing (NLP), deep learning (DL), and machine learning (ML), are helping to prevent fraud, particularly in sectors like banking, finance, and e-commerce.
Mahajan notes that collaboration between banks, fintech companies, and regulators is essential in building secure, scalable payment systems.
“These partnerships are crucial in strengthening security while fostering an inclusive and innovative financial ecosystem,” he says.
The role of UPI and impact on traditional payments
The Unified Payments Interface (UPI) has experienced growth, with a global reach extending to countries like Sri Lanka, Mauritius, and the UAE.
In November 2024, UPI processed 15.48 billion transactions totaling ₹21.55 lakh crore. UPI 123Pay, which allows transactions without a smartphone or internet connection, has been a game-changer in making digital payments more accessible.
“UPI is reshaping how people and businesses interact, offering a simple and convenient way to make transactions,” Mahajan explains.
Recent changes, such as higher transaction limits for UPI 123Pay and UPI Lite wallets, have further improved accessibility, especially in rural areas.
BNPL: Flexibility and financial responsibility
The growth of buy now, pay later (BNPL) services in India reflects a shift towards digital-first credit solutions.
While BNPL offers short-term, interest-free credit for online purchases, Mahajan emphasises the importance of understanding the terms before opting for this payment method.
“Before using BNPL, it’s important to consider factors like interest rates, repayment terms, and overall affordability,” he advises.
QR code payments transforming small business operations
QR code-based payments are playing a significant role in transforming small businesses, with person-to-merchant (P2M) transactions expected to represent 75% of all UPI transactions by 2025.
ALSO READ | RBI’s new rule allows PPIs to use UPI through third-party apps
The introduction of NBBL Bharat Connect QR, which enables billers to convert offline collections into digital payments, is a step towards further simplifying digital transactions.
“QR-code payments are making it easier for both consumers and merchants to adopt digital payments, improving overall convenience,” Mahajan says.
ALSO READ | UPI QR transactions rise by 33% at retail stores in Bharat: PayNearby
