At 3.5 billion transactions in August, UPI clocks 120% surge in volume

In August, the flagship payment platform of the National Payments Corporation of India (NPCI), the Unified Payments Interface (UPI), registered more than 3 billion transactions for the second month in a row, indicating increased digital payment usage.

In August, UPI processed 3.55 billion transactions, which is a new milestone for the payment network since its inception. In terms of value, UPI transactions were Rs. 6.39 trillion (US$ 87.47 billion) in August, which is a new high. In August, UPI's volume of transactions increased by 9.5% month over month (MoM), while the value of transactions increased by 5.4%.

UPI handled 3.24 billion transactions in July, up 15.7% from 2.8 billion transactions in June. In terms of value, the platform processed Rs. 6.06 trillion (US$ 82.95 billion) in transactions in July, increasing 10.76% from June.

Since its launch in 2016, UPI has witnessed massive popularity, which has been boosted by the Covid-19 pandemic. In October of this year, it surpassed 1 billion transactions for the first time. The following billion transactions were completed in less than a year. For the first time in October 2020, UPI completed over 2 billion transactions. Furthermore, the jump from 2 billion to 3 billion transactions per month took only ten months, demonstrating UPI's enormous appeal as a platform for retail digital payments among consumers.

The payment platform had a slight fall in April and May, coinciding with a drop in economic activity as a result of the pandemic's second wave, but recovered when the economy recovered.

In 2020-21, UPI accounted for 10% of all retail payments (excluding real-time gross settlement), with a compound annual growth rate of 400% between 2016-17 and 2020-21. UPI had just 2% of the entire retail payment market till a few years ago. Interoperability, an open-source platform, convenience of usage, and no merchant discount rates have all contributed to UPI's phenomenal development.

While the majority of transactions on the UPI platform are peer-to-peer (nearly 81% by value), implying that UPI is replacing cash in the payment ecosystem and, as a result, driving more digitisation of the economy, around 19% of transactions are peer-to-merchant (nearly Rs. 9.96 trillion (US$ 136.34 billion)), surpassing both credit and debit card point-of-sale transaction values.

Third-party application providers dominate the UPI platform, including Walmart-backed PhonePe and technology giant Google-backed Google Pay.

Immediate Payments Service (IMPS), another payment network run by the National Payments Corporation of India (NPCI), reported 377.94 million transactions in August, an increase of 8.05% over July. In terms of value, IMPS transactions totaled Rs. 3.18 trillion (US$ 43.53 billion), up 3.03% from July.

FASTag, which is part of NPCI's National Electronic Toll Collection initiative, had a record number of transactions in August, with 201.2 million transactions worth Rs. 3,076.56 crore (US$ 421.11 million), up 3.36% from the previous month.

Similarly, the Bharat Bill Payment System, which serves as a one-stop shop for all recurring bill payments, had 58.88 million transactions totaling Rs. 10,307.4 crore (US$ 1.41 billion). The number of transactions increased by 15% and the value of transactions increased by 7.22% on a month-over-month basis.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.