UPI transactions may soon touch 100 billion a month, says NPCI CEO

Digital payments on the Unified Payments Interface (UPI) have the potential to touch 100 billion transactions a month in the near future. 

Dilip Asbe, managing director (MD) and chief executive officer (CEO) at the National Payments Corporation of India (NPCI), in conversation with Rajan Anandan, MD, Peak XV and Surge at the Global Fintech Fest in Mumbai, said that the UPI transactions can grow 10 times every month. 

When asked on the growth potential of UPI, Asbe said: “Today, UPI is used by 350 million people. We have a three-time opportunity on the user side and a three-time opportunity on the merchant side. We have an opportunity to grow 10 times from here.”

In August, UPI touched a new milestone of 10 billion transactions a month. 

Asbe, however, did not specify the timeline by which the NPCI is targeting 100 billion transactions a month. 

The growth in UPI volumes can be achieved on the back of enhanced digital payments coverage in Tier-II and II three cities with feature phones being used for payments with UPI123Pay. It can also be via expansion of credit on UPI, and a rise in international payments. 

“The timeframe in which we are going to achieve the 100 billion target is not known right now. But the UPI123 can help achieve the target faster,” said K Vijaykumar, general manager at the department of payment and settlement systems of the RBI.

When asked what has led to the growth of UPI, Asbe said that the constant evolution of the system with new features has meant access to more and more users. “It is not like 2016, the continuous progress is helping UPI grow,” he added.

Globally, Mastercard processes over 11.8 billion credit and debit transactions per month. Its rival Visa processes 22.5 billion transactions per month. 

UPI’s 10 billion per month transactions places it among the fastest growing payment processing systems in the world. 

With regard to credit on UPI, Asbe said that the cost of underwriting and acquisition in credit cards was high, making it difficult to reach every individual. 

“We are working very closely with all the large lenders like HDFC, ICICI Bank, Axis, SBI Card and public sector banks. We need fully digital experience platforms by the banks to drive growth,” Asbe added. 

Monetising transactions on UPI has also been a challenge for fintechs in the payments space. 

“Consumers should not be paying any charges for the payments. On credit on UPI, one can plough back some credit to the payments side as transaction charges can be passed back. Even when we think about cross-border transactions through UPI, I am sure those will be charged,” Rahul Kothari, chief business officer (CBO) at Razorpay, told Business Standard. 

“Overall, UPI has set the benchmark for India in terms of how the growth in payments in the overall ecosystem happens. We need UPI payments outside smartphones, such as feature phones, for UPI payments (to reach the 100-billion mark). It can unblock a huge number of consumers, who can use it for payments in smaller cities. 

India is a credit starved nation and UPI probably has the best wheels in the country to give sachet sized loans. Some of the international, cross-border transactions should, at some point, be significantly driven by UPI,” said Kothari. 

According to NPCI data, the transaction volume touched 10.24 billion users in August. In terms of value, UPI transactions are poised to reach a new high, having already touched Rs 15.18 trillion.

This is within striking distance of the previous high of Rs 15.34 trillion, which was recorded in July.