UPI Transactions In India Grew To Rs 10.7 Trillion In August, Says NPCI Report
According to data released by the National Payments Corporation of India (NPCI), the Unified Payments Interface (UPI) processed 6.6 billion transactions worth Rs 10.73 trillion in August. UPI transactions increased 4.6% in volume and 1% in value month over month (m-o-m).
The Reserve Bank of India (RBI) recently proposed linking UPI to RuPay credit cards in order to provide customers with a broader range of options. According to industry participants, the addition of this functionality could propel UPI growth into the next phase.
According to NPCI data, the total value of UPI transactions during August this year was 657 crore, up from 628 crores the previous month.
According to Rajesh Mirjankar, MD & CEO of Kiya.ai, the latest transaction numbers demonstrate UPI’s popularity as a preferred mode of payment among a broader set of consumers.
“With the acceptance of card payments via UPI the transaction volumes are bound to grow strongly and the average value per transaction too will increase,” he said.
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UPI has risen to prominence among retail payment channels in recent years, tearing out into the share of card-based transactions. According to a recent report published by Boston Consulting Group (BCG) and PhonePe, UPI transaction volumes comprised over 60% of non-cash transaction volumes in India in FY22.
“Led by an open and interoperable architecture with direct payments linked to a bank account without the need to top-up wallets, UPI transactions are at approximately 9x of credit and debit card transactions today in volume terms in FY22,” the report said.
According to the report, UPI is forecast to expand and push 75% of total digital transaction volumes over the next five years.
UPI charges no fee to merchants, which many believe is the primary reason for the channel’s increased popularity. According to some analysts, applying market-determined merchant discount rates (MDRs) to credit card-linked UPI transactions might counteract the gains made in terms of digital adoptive parents.
In August, the RBI issued a discussion paper on charges in the digital payments ecosystem, seeking industry feedback on the reintroduction of MDR on UPI, among other things. However, the Ministry of Finance later stated that the government was opposed to charging for UPI due to the payments channel’s public good nature.
Last week, India’s Finance Minister Nirmala Sitharaman stated that people should have free access to online services such as UPI so that the digitalization of the Indian economy becomes appealing to them.
“We intend to achieve a higher level of transparency through digitization. Therefore, we do think it’s not yet time for charging for UPI services,” she said. If budgetary support for the digital payment ecosystem is found to be insufficient, the minister stated that it will be addressed separately.
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