India's Digital Payments Boom: Worldline Report Highlights UPI Surge and SoftPOS Adoption

India's digital payments landscape is changing quickly, spurred by the growing acceptance of Unified Payments Interface (UPI), increases in Point-of-Sale (POS) terminals, and mobile payments. The "India Digital Payments Report for 2H 2024" by Worldline details important information about changes in the industry and the growing prevalence of digital transactions and innovations shaping the future of payments in India.

Key Highlights: The Rise of UPI and Mobile Transactions

UPI continues to be India's digital payments backbone, with transaction volume expanding 42% year-on-year (YoY) to 93.23 billion transactions and transaction value growing by 31% to INR 130.19 trillion. This growth further exhibits UPI's leadership in both person-to-person (P2P) and person-to-merchant (P2M) transactions. The total number of UPI QR codes reached 633.44 million, up to 126%, reflecting high levels of merchant penetration.

Mobile payments also realized considerable growth. Mobile payments grew 41% YoY in transaction volume to 88.54 billion, which complements the move to mobile-first financial behavior. Furthermore, a falling average ticket size (ATS) for UPI transactions reflects a trend towards microtransactions, yielding digital payments to be the preferred method of payment for daily purchases.

POS Infrastructure Expansion and SoftPOS Innovation

The physical payment infrastructure continued to expand, with POS terminals surpassed 10 million units representing a 23% YoY increase. This continued expansion forms part of a larger objective of pushing digital payments into smaller businesses and into remote areas.

One meaningful advancement in the merchant payment space is the introduction of SoftPOS which allows merchants to simply use NFC-enabled smartphones as secure contactless payment terminals. This new technology helps to reduce reliance on traditional POS hardware, promoting easier and more cost-effective access to digital payments for small and medium enterprises (SMEs).

Consumer Trends: Credit Cards and Prepaid Cards Gain Traction

Although UPI remains the leading payment modality, credit card transactions grew 36% year-over-year and reinforced their importance in high-value transactions. The number of credit cards issued was also reported to have increased 10.4% year-over-year to 108.06 million, with HDFC, SBI, ICICI, Axis, and RBL being the top five issuers of credit cards.

The same report also identified a ‘shift in trends’ with debit card transactions declining 29%, indicating the ongoing shift to UPI-based payments.In the same time period, prepaid cards saw growth reported at a massive 35%, indicating an increase in consumer preference for more flexible, digital payment options. 

The average transaction size (ATS) for credit card transactions fell by 16%, demonstrating that consumers are using credit cards more frequently, but for smaller amounts - a pattern related to consumers using more digital credit for their regular spending patterns.

Sectoral Adoption: Digital Payments Powering Key Industries

The report also identifies probably the most common types of spending categories in physical stores - grocery stores, restaurants or food-service providers, pharmacy and government services (i.e., taxes, etc.), which collectively comprise 68% of the transaction volume and 53% of the total transaction value. In digital transactions for the past year, spending categories such as e-commerce, gaming, utilities and financial services accounted for the remaining 81% of total digital transactions, and 74% of the total transaction value.

The states leading in adoption and usage of digital payment modalities are Kerala, Maharashtra, Tamil Nadu, Karnataka, Delhi, Telangana, Uttar Pradesh, Gujarat, Jharkhand and West Bengal, with evidence of high levels of vertical penetration in these states.

UPI Market Leaders and Remitter-Beneficiary Banks

PhonePe, Google Pay, and Paytm continued to lead the market, responsible for 93% of UPI transactions in December 2024. Of the beneficiary banks, Yes Bank led the field with 6.65 billion transactions, followed by Axis Bank and the State Bank of India. On the remitter side, SBI continued to lead all banks, with 4.54 billion transactions.

FASTag and Electronic Toll Collection Growth

Electronic toll collection (FASTag) adoption steadily expanded, with 103.1 million tags issued as of December 2024. FASTag transaction volume increased by 9% to 2.05 billion with values increasing 12% to INR 356.37 billion. This is evidence of the continued improvement in seamless cashless toll payments.

Looking into the Future: India’s Digital Payments Industry

Growth trajectory in UPI, mobile payments, and SoftPOS technology indicates an increasing digital future for financial transactions in India. The government's push for a cashless economy and financial inclusion provides a tangible path forward for innovative digital payment solutions to propel the next phase of India’s fintech evolution.

Many aspects are currently assisting in this evolution, including UPI, expansion of POS, growth in mobile payments, and digital finance literacy. Ramesh Narasimhan, the CEO of Worldline India, observed, "India’s digital payments ecosystem is evolving at an unrivaled speed.

The growth in UPI usage, POS infrastructure, and the mobile payment phenomena is further indicative of India's growing digital finance literacy and engagement. Worldline as a global payments technology company and a leader in secure payments ecosystem is driving this transition, by providing secure, innovative, and inclusive payment solutions, selling in a way to empower business and consumers.

"As digital payments continue to reshape commerce, financial services, and day-to-day transactions in India, the industry will continue focusing on security, accessibility, and scalability to support the next billion digital transactions.