The importance of the Unified Payments Interface (UPI) in advancing India’s digital ecosystem can be estimated from the fact that it has pushed digital transactions nine times since 2016 when it was rolled out.
A Moneycontrol analysis shows that the share of UPI in India's digital transactions grew from 4.4 percent in FY18 to 70 percent in FY24. Prime Minister Narendra Modi pitching for the service to help BRICS nations take the digital leap to a cashless economy throws no surprise.
India has partnered with the United Arab Emirates (UAE), a recent addition to the BRICS block, for UPI transactions.
In fact, India outranks its BRICS peers when it comes to digital payment volumes. In FY24, India's digital transaction volumes were higher than those of China's and Brazil's.
More importantly, a report by Paysecure shows that the UPI leads the world in transaction volumes. In 2023, the UPI recorded 3,729 transactions per second, just a shade below the next three competitors combined.
In comparison to India's UPI, Skrill, a digital wallet with presence in over 100 countries, recorded 1,554 transactions per second, while Brazil’s instant real-time payment system PIX logged in 1,332 transactions per second and China’s Alipay registered 1,157 million transactions in 2023.
A recent study published by RBI researchers shows that the UPI is slowly replacing cash as a preferred mode of transaction as well.
The share of cash payments in private final consumption expenditure or India’s consumption spending, has declined from 80.6 percent in 2021 to 51.9 percent in the first quarter of 2024 (January-March 2024). The share of digital in PFCE rose from 19.4 percent to 48.1 percent in this period.
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