By 2031, India’s digital payments ecosystem is projected to reach approximately 702 billion transactions annually valued at more than INR 1,086 trillion (US$11.3 trillion), according to estimates by PwC.
These figures represent a 2.6-fold increase in volume and a threefold rise in value over five years, with annual growth of 21% and 25% between 2026 and 2031.
According to the research, this growth will be supported by payment habits increasingly centered on digital rails, product innovations, and deeper system links, with the Unified Payments Interface (UPI), Bharat Connect, and credit cards leading much of the momentum.
Bharat Connect poised for the strongest adoption
Between fiscal year 2026 (FY26) ending March 31 and FY31, Bharat Connect is set to witness the strongest growth among digital payment methods in India, supported by electricity bill payments, rising credit card bill payments, and insurance and loan repayments.
By FY31, Bharat Connect is projected to reach 13.2 billion transactions, increasing 34% annually from FY26, and a total annual transaction value of INR 101.9 trillion (US$1.1 trillion), rising 46% each year.
Bharat Connect is the National Payments Corporation of India (NPCI)’s official bill payment platform, enabling safe and seamless payments across 30 categories, 12 million users, and 22,000 billers. It started out as a utility bill payment system before expanding into a broad payments and collections platform, extending beyond recurring household bills to include electronic vehicle (EV) recharge, business-to-business (B2B) payments, foreign exchange (FX), and fleet card recharge.
UPI growth continues on geographical expansion and new capabilities
After Bharat Connect, UPI is expected to record the second strongest growth in India’s digital payments landscape between 2026 and 2031, driven by deeper merchant penetration, new payment use cases, and international expansion of domestic systems.
Between FY26 and FY31, UPI volumes and value are projected to grow 22% and 24%, respectively, each year. By FY31, UPI is set to reach 651 billion annual transactions valued INR 906 trillion (US$9.4 trillion).
UPI is a real-time payment system introduced in 2016 that facilitates inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions. It’s used on mobile devices to instantly transfer funds between two bank accounts using only a unique UPI identification.
Since its inception, UPI has added features such as tap-and-pay for near field communication (NFC) payments at point-of-sale (POS) terminals, as well as support for artificial intelligence (AI), most recently. Several capabilities are currently in the works, including agentic commerce.
In addition to its home country of India, UPI also operates in more than ten other countries, including Singapore, the United Arab Emirates (UAE), France, Qatar, Sri Lanka, Cambodia, and most recently Israel. NPCI and the Reserve Bank of India (RBI) are working towards a target of 20 countries by FY28-29.
Credit cards ride a wave of innovation and rising consumption
Though 2031, the credit card market will remain a central driver in India’s digital payments landscape. Building on a base of about 118.6 million cards in FY26, the number of outstanding credit cards is projected to reach 204 million by FY31, implying an annual growth rate of 11% and a possible expansion of the overall market penetration by an incremental 10-15%.
Transaction behavior will continue to witness a pronounced transformation, with credit card transaction volumes expected to grow from 6 billion in FY26 to 18 billion by FY31, reflecting an annual growth of 24%. Transaction values, meanwhile, are projected to increase from INR 23 trillion (US$240 billion) to INR 69 trillion (US$719 billion) over the same period, growing 24% annually.
This growth will be driven less by ticket size expansion and more by increasing frequency of usage, further showcasing evolving payment habits. The average number of transactions per card is set to rise significantly from 51 transactions annually in FY26 to 88 by FY31, with annual spending per card projected to grow from INR 198,000 (US$2,000) to INR 338,000 (US$3,500).
Growth in India’s credit card market will be underpinned by rising consumption, ongoing behavioral shifts, and product innovation.
Developments such as the linkage of RuPay, India’s electronic card payment network, and UPI, are enhancing acceptance and usage, particularly for everyday transactions. Meanwhile, e-commerce continues to gain prominence, now accounting for 50-65% of total transaction volumes and values, supported by the proliferation of digital commerce and cobranded credit card offerings.
The digital payments landscape in 2026
In FY26, digital transactions volumes in India stood at approximately 266 billion with a total value of INR 362 trillion (US$3.8 trillion), rising 29% in volume and 27% in value year-over-year (YoY).
UPI dominated these payments with a 91% share, processing about 242 billion transactions amounting to INR 314 trillion (US$3.3 trillion), with P2M accounting for 63% of volume. YoY, UPI transaction volumes increased 30% while value grew 20.3%.
While digital payments continued to gain share in frequent, low-value commerce because of their convenience and expanding acceptance, cash remained relevant in parts of rural and informal commerce and in categories where physical currency continues to be preferred. This strength appears in currency in circulation, which rose 12% YoY to a record of INR 41.7 trillion (US$435 billion) in FY26.
Significant trends also appeared in FY25 and FY26. In particular, AI moved from pilot to embedded infrastructure across India’s financial services industry, supported by the same Digital Public Infrastructure (DPI) that powers UPI and Aadhaar, India’s national identification system. Newer efforts include AI-based credit scoring, Banking BHASHINI, a model to be developed that integrates banking vocabulary, regulatory guidelines, and industry-specific applications, and MuleHunter.AI, an AI-powered tool designed to identify and mitigate mule bank accounts used in cybercrimes.
The past year was also defined by regulatory developments aimed at improving customer convenience, strengthening compliance, and fostering innovation. Reforms included enhanced governance and compliance requirements for payment aggregators and payment system operators, a consolidated framework for recurring digital payments via e-mandates, guidelines on cross-border inward remittances, and updated guidelines on prepaid payment instruments.
Featured image: Edited by Fintech News Singapore, based on image by magnific via Magnific
