The Centre has been pushing paperless payments since a long time when the government first introduced demonetisation in 2016. Today, though it is a known fact that cash is still the king, online payments have soared multifold. The Unified Payments Interface (UPI) reached a peak in 2022 as the number of transactions reached a record of 782 crores UPI transactions in December and totalled Rs 12.82 lakh crore, also a record high.
According to data issued by the National Payments Corporation of India (NPCI), the regulatory authority for retail digital payments, the volume of transactions in December increased by 7.12 per cent when compared to November, while the value of transactions increased by 7.73 per cent during the same period. In 2022, payments via UPI had crossed the Rs 12 lakh crore mark in October.
In November, UPI recorded 730.9 crore transactions worth Rs 11.90 lakh crore. If compared on a year-on-year (YoY) basis, in December, the volume of transactions was up 71 per cent and the value of transactions was up 55 per cent.
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Since the last two years, since the pandemic and lockdowns started, the volume and value of UPI transactions have significantly grown. As per experts, UPI’s upward trajectory mirrors the recovery in the broader economy and the increased adoption by consumers of digital modes of payments for their daily transactions.
According to Mandar Agashe, MD and Vice Chairman of the banking technology solutions provider, Sarvatra Technologies, the year 2022 will go down as the one that showed the immense potential of UPI, as more and more merchants came on board and adopted it. “Owing to its demand, it is not surprising that UPI processed more than 780 crore transactions. With the easy accessibility and speed of transactions that UPI provides, the major urban and semi-rural population of India has become habitual to UPI transactions, which resulted in a 71 per cent YoY rise in the volume of transactions,” Agashe told Business Today.
In the last 12 months, i.e. in 2022, UPI processed over 7,400 crore transactions, worth Rs 125.94 lakh crore, NPCI data showed. In 2021, the platform processed over 38 billion transactions worth Rs 71.54 trillion.
Between 2021 and 2022, the volume of transactions on the platform jumped by over 90 per cent and the value jumped by 76 per cent.
Ranvir Singh, founder and CEO of RING, points out that India has managed to create a vast and, most importantly, scalable public digital infrastructure for UPI to thrive. RING is a consumer-first digital payments app launched by Mumbai-based Kissht, a leading fintech player.
“India has created a vast and scalable public digital infrastructure, laying the groundwork for a powerful, globally significant Digital Payments Revolution, where the UPI payment mode has shadowed every other payment mode. It is almost 10 times the number of credit cards, which have been around for more than four decades. The digital payment ecosystem has gone beyond the privileged and the tech-savvy by bringing benefits to the masses, thanks to the push from the government, payment apps, and new-age fintech start-ups,” said RING’s Singh.
In the last two years, after the UPI adoption, the platform is now processing more peer-to-merchant (P2M) transactions than peer-to-peer (P2P) transactions, in volume terms.
Earlier, UPI was used mostly for P2P transactions. But the trend has significantly reversed in the last two years since the lockdown restrictions. Now, UPI is the most preferred payment mode for P2M transactions.
As per data by Statista, digital payments will continue to see the strong growth of recent years, touching an estimated $153 billion in transaction value in 2023, compared with $133 billion in 2022.
Experts feel the year 2023 will see increased focus and investment toward scaling up the security infrastructure and securing financial transactions across UPI and other digital payment platforms. The introduction of single-block-and-multiple debits functionality in UPI will ease making payments in the e-commerce space and towards investments in securities.
“UPI transactions have increased significantly over the past year, which demonstrates the popularity of the system in India. RBI has played a crucial role in introducing facilities such as UPI linkage to credit cards, UPI 123 service that works fully offline, UPI Lite, cardless cash withdrawal facility at ATMs through UPI, and more. Due to this, UPI has been proven to be the most favoured method of transaction preferred by most millennials and Gen Z. We anticipate UPI to cross a record high of the 10 billion-mark as the government’s push towards digital India is yielding the right results in the adoption of digital payment methods,” observed Agashe of Sarvatra Technologies
“As we enter 2023, UPI will continue to dominate the debit and credit card segment on the volume of transactions. The next growth phase of UPI Payments will come from Tier 2 and 3 cities as internet and smartphone accessibility are improving digital literacy across the hinterlands. Offline digital payments such as UPI 123pay will increase person-to-merchant (P2M) and peer-to-peer (P2P) transactions, through payment apps. Lastly, UPI and newer modes of digital payments will foster stronger and intuitive collaborations between banks, NBFCs, and new-age fintechs,” said Singh.