Global Non-Cash Transactions Set to Soar, UPI Emerges as India’s Game-Changer
Pune, 14th December 2023: In a groundbreaking revelation, a recent report by Capgemini Research Institute forecasts a staggering 16.6% year-on-year growth in global non-cash transaction volumes, reaching the 1.3 trillion milestone by the end of 2023. Looking ahead, this trend is anticipated to surge at a rate of 15%, hitting an impressive 2.3 trillion by 2027. Regional insights indicate robust growth in digital payments across the Asia Pacific at 19.8%, Europe at 10.7%, and North America at 6.5% during this period.
The star performer in this global financial landscape is the United Payments Interface (UPI) in India, riding high on real-time networks and open banking. Prakash Venkataramani, Senior Director & Global Payments at Flywire, underscores the transformative impact of real-time payments, citing a remarkable figure of 11 billion transactions on UPI in October-November 2023. This signifies a profound influence on India’s economic landscape, establishing UPI account-to-account payments as the preferred choice for consumers and businesses.
Despite the commendable strides in India’s payment ecosystem, only 44% of Indian payment executives have completed or reached the final phase of the ISO20022 migration, a global financial messaging standard. The Reserve Bank’s upcoming UPI feature, enabling consumers to block account funds for post-service delivery payments, aims to elevate UPI usage for e-commerce, potentially replacing the traditional cash-on-delivery method.
On a global scale, the growth trajectory aligns with the increasing exploration of central bank digital currencies (CBDCs). As of June 2023, 130 countries, representing 98% of the global GDP, are considering CBDCs. This represents a significant surge from 2020 when only 35 countries were exploring the concept.
Saksham Bhagat, CEO & Co-founder at Swift Money, shared insights at the Internet Commerce Summit, emphasizing the role of Cash on Delivery (COD) in India’s e-commerce industry. He describes COD as a double-edged sword, acknowledging its necessity for growing brands to acquire customers continuously. While addressing the costs associated with COD, Saksham underscores its crucial role in securing trust for first-time and second-time buyers. He advocates a strategic approach for D2C brands, initially providing COD to build trust and gradually transitioning users toward seamless online payment methods like UPI and credit cards.
Unveiling the current landscape of global non-cash transactions, retail payments dominate with a 59% share in total volume, while commercial payments constitute 41%. However, in terms of value, commercial payments command a significant 56%, leaving retail payments at 44%. In the Asia Pacific region, the value share is evenly split between commercial and retail payments, each accounting for nearly 50%. As the global financial ecosystem continues to evolve, these trends showcase the pivotal role of real-time payments and digital innovations in shaping the future of transactions worldwide.
