Northeast takes the lead on digitisation: PhonePe Pulse Q1 2022 Data

North East Region (NER) has taken the lead on digitisation as Unified Payments Interface (UPI) has emerged as the most popular mode of payment in the region, according to PhonePe Pulse Q1 2022 Data.

According to a report by the Ministry of Electronics & Information Technology, UPI has now become the most popular mode of payment and 58 per cent of the total 1.5 million merchants in the northeast have been digitised.

The PhonePe Pulse data throws light on the varied use case of these digital payments trends seen in the NER. For instance, PhonePe is accepted as a payment option across the toughest terrains of NER including far-flung towns such as the Changlang district in Arunachal Pradesh. Assam witnessed the fastest adoption with over 2.5 lakh merchants in 2022 compared to just 10,000 merchants in 2020, followed by Tripura, Meghalaya, Arunachal Pradesh, Nagaland, Sikkim, and Mizoram. Along with the acquisition rate, the overall transactions have also seen a significant rise from 14.8 lakh transactions in Q1 2018 to over 7.5 crore transactions in Q1 this year.

Walmart-owned digital payments firm PhonePe released the digital payment trends for Q1 (January-March) 2022. The latest PhonePe Pulse trends reveal interesting insights on digital payments in the country. The first quarter of the year saw a spike in P2P (money transfer between people) and P2M (money transfer between people and merchants) transactions, and strong growth in both payment volumes as well as the number of registered users, indicating a continued uptick in digital payments.

“We are also excited about PhonePe’s P2M transactions exceeding P2P transactions indicating that digital payments have truly penetrated the merchant ecosystem and gained ubiquitous acceptance across the country,” said Karthik Raghupathy, head of strategy and investor relations at PhonePe. “This in turn is creating a virtuous loop of consumer demand fueling merchant acceptance and vice versa.”

Consistent efforts made by digital payment companies to educate, engage and empower merchants have led to the phenomenal growth of merchant networks across the country. This change has also been enabled by the interoperable QR (quick response) codes riding on top of UPI, allowing merchants to accept payments from customers and pay suppliers with minimal resistance.

Riding on this growth, PhonePe has digitized nearly 30 million merchants, adding over 3 Million merchants in Q1 2022 alone. PhonePe Pulse data indicates that geographically, Andaman and Nicobar Islands-registered the highest jump in P2M transactions with a 29 per cent Q-o-Q (quarter on quarter) increase in this period.

Also, sixteen states and union territories witnessed over 100 per cent growth in merchants onboarded in 2021 vs 2020, bearing testimony to the increasing acceptance of digital payments across India. Merchants in Uttar Pradesh lead the adoption numbers as per PhonePe Pulse data, followed by Maharashtra, Karnataka, West Bengal, and Rajasthan, comprising 49 per cent of the merchants in the PhonePe network.

While the pandemic was an inflection point for the adoption of digital payments, PhonePe Pulse Q1 2022 data is a testimony to the growth momentum that has been sustained over the last 2 years. The UPI numbers released by NPCI in March 2022 show the overall transaction volume was over 5.4 billion and PhonePe Pulse data indicates a surge in both P2P and P2M volumes. This growth momentum is expected to continue as the payments ecosystem targets the next 500 million users with a focus on getting new users from Tier 3, 4, and beyond to the digital payments fold.

“As predicted in our Q4 report, we continued to see a surge in volumes in Q1 2022 across various use cases further cementing the fundamental shift in consumer behaviour towards contactless payments,” said Raghupathy of PhonePe.