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India’s Unified Payments Interface (UPI) crossed 5 billion transactions in a month for the first time in March, marking a landmark for the flagship digital payments platform.
UPI had till March 29 processed 5.04 billion transactions, amounting to Rs 8.88 trillion, data released by National Payments Corporation of India (NPCI) showed. This was 11.5 per cent higher than the volume of transactions processed in February and 7.5 per cent higher in terms of value of transactions processed.
In March 2021, UPI processed 2.73 billion transactions, amounting to Rs 5.04 trillion. So far in FY22, the payments platform has processed over 45 billion transactions, amounting to over Rs 83 trillion, thus breaching the $1 trillion mark. In FY21, it had processed 22.28 billion transactions, amounting to Rs 41.03 trillion. So, both volume and value of transactions doubled in a year’s time, indicating the meteoric rise seen in the adoption of digital payments, especially UPI, in the country.
UPI saw a dip in transactions in FY22 due to the second wave of the pandemic, but soon after the transaction count--both in volume and value terms--recovered to report new highs every month.
Launched in 2016, UPI crossed 1 billion transactions in October 2019. The next 1 billion came in under a year. In October 2020, UPI processed more than 2 billion transactions. The journey from 2 billion transactions a month to 3 billion was traversed in 10 months, but it took only three months for the payment platform to reach 4 billion transactions per month, from 3 billion. And, the incremental one billion transactions were achieved in just six months’ time.
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Experts have reckoned that the pandemic has inadvertently accelerated the adoption of digital payments in the country by 5-10 years and the burgeoning UPI transactions is a testament to that. Since the pandemic began, UPI’s transaction volume has gone up by over 300 per cent and transaction value has gone up by 331 per cent. While initially it was considered as a preferred payment mode for peer-to-peer (P2P) transactions, it has now emerged as the preferred mode for even peer-to-merchant (P2M) transactions, with over 56 per cent market share in volume terms in 2021.
Further, the rapid adoption of digital payments in the country is reflected in the Reserve Bank of India’s digital payments index (DPI), which was launched in January to indicate the extent of digitisation of payments across the country. The DPI for September 2021 stood at 304.06 as against 270.59 in March 2021. In March 2019 the index stood at 153.47 and by September 2019, it rose to 173.49, followed by 207.94 in March 2020, 217.74 in September 2020, and 270.59 in March 2021. RBI has said the index will be published on a semi-annual basis with a lag of 4 months. The RBI-DPI has been constructed with March 2018 as the base period, i.e., DPI score for March 2018 is set at 100.
The next target for UPI is to process a billion transactions a day in the next three to five years. According to experts, the next boost to the already burgeoning UPI transactions will come the AutoPay feature, which has seen massive adoption since recurring payments through cards saw disruption due to the Reserve Bank of India’s new guidelines on e-mandates. The AutoPay feature of UPI allows recurring payments of up to Rs 5,000.
Recent initiatives of the Reserve Bank of India (RBI) and NPCI will also boost the transaction count and value in the coming days. NPCI has launched the “on-device” wallet feature for UPI users, which will be known as “UPI Lite”, for facilitating small ticket transactions.
NPCI believes that this “on-device” wallet feature will go a long way in achieving its pipe dream of processing one billion transactions a day in the next 3-5 years. Further, the RBI in association with NPCI has launched the UPI123Pay for 400 million feature phones which will allow all transactions to be done through feature phones without an internet connection. This will ensure further democratisation of UPI in the country and make digital payments more inclusive by including the participation of people belonging to the economically lower strata of society.
