Virendra Pandit
New Delhi: India’s financial transaction miracle, Unified Payments Interface (UPI), which has taken over 40 countries in the world by storm, is skyrocketing everywhere—replacing cash as a relic.
In August, for example, UPI recorded a landmark more than 10 billion monthly transactions across India. It was a historic 50 percent year-on-year growth.
The government is targeting to take it further to 100 billion transactions a month.
Launched in April 2016 by the National Payments Corporation of India (NPCL), a non-profit arm of the Reserve Bank of India (RBI), UPI has been a key driver of digital payments in India and many other countries, like France, Germany, and the UAE are adopting it rapidly. Over 40 other countries are in talks with India on this.
The NPCL confirmed that August recorded over 10 billion transactions under the UPI flag, signifying its increasing popularity and adoption of digital payments in India.
UPI’s growth trajectory has been remarkable, with monthly transactions exceeding 10.24 billion by the end of August. This represents a significant increase from the 6.58 billion transactions in August 2022, marking a growth rate of over 50 percent year-on-year.
Within three years of the launch, it crossed 1 billion monthly transactions for the first time in October 2019 and in less than four years, it has grown tenfold, showcasing its rapid adoption and acceptance in the Indian payment landscape.
Industry experts believe that there is still substantial potential for UPI transactions to grow. Peer-to-merchant (P2M) transactions on UPI are growing at an impressive pace, surpassing peer-to-peer (P2P) transactions in share. This trend suggests that P2M transactions will be a driving force behind UPI’s future growth, potentially reaching 20 billion monthly transactions within the next 18-24 months.
The government has played a role in promoting digital payments, with the Ministry of Electronics and Information Technology (Meity) offering incentives. These schemes have boosted the adoption of digital payment systems like Aadhaar Payment Bridge, Aadhaar-enabled Payment System (AePS), and UPI. In FY23, Rs. 2,600 crore was allocated for these initiatives.
The NPCL’s data for July reveals interesting trends in UPI transactions. Merchant transactions accounted for a significant share, representing 58 percent of all UPI transactions in terms of volume. However, user-to-user UPI transactions dominated in terms of total value, contributing nearly 75 percent of the total transaction value, amounting to Rs. 11.48 trillion.
In the competitive landscape of UPI apps, PhonePe, a domestic fintech and e-commerce platform, led the market share in June, with over 47 percent of all UPI transactions occurring through this platform. Google Pay (35 percent) and Paytm (14 percent) secured the second and third positions, respectively, in terms of market share.