Unified Payments Interface (UPI), the peer to peer digital payments mechanism run by the National Payments Corporation of India, recorded 2 billion transactions in October, scaling this peak for the first time. Interestingly it took just 12 months for the transaction count to double, reflecting massive growth shown by this payment platform over the months.
Industry insiders pointed out that UPI is becoming the de-facto choice of payments for services consumed by Indians online. Therefore even if growth has been slow for cards and Aadhaar based services, UPI has continued to march ahead.
“The festive season played a crucial role in catapulting UPI transactions into the 2 billion club, aggressive sales done by ecommerce players have helped UPI transactions to shoot up,” said a top executive at a digital payment company.
Many services have completely moved online driven by Covid-19 and hence that has caused a chunk of cash payments to move digital and UPI has benefited a lot from that, he said.
Bengaluru based PhonePe said that they have processed 835 million UPI transactions in October. In a press note released today, the Walmart backed company said that they have registered 250 million users on the app with 100 million being monthly active.
Peer to peer transactions continued to be the dominant use case for UPI but merchant payments are quickly gathering steam. A top executive at a payments firm pointed out that even fantasy gaming has pushed UPI numbers drastically, something which has been a rage throughout the ongoing Indian Premier League season.
“Cricket fantasy gaming platforms themselves are doing approximately 100million transactions monthly,” he added.
While the number of transactions has continued to grow, transaction failure rates have kept pace too. Moneycontrol recently wrote about UPI transaction failures becoming a major issue with large banks like State Bank of India, Axis Bank, HDFC Bank, ICICI Bank and Paytm Payments Bank showing significant jump in failure rates.
Now, the big question doing the rounds in the banking circles is around whether UPI is eating into debit cards or net banking. While that might be difficult to point out, sources quoted above mentioned that net banking has surely lost favour among the new generation consumers, who prefer using UPI as a means of a direct debit of their bank account. Further aggressive offers on UPI and cards have helped move a chunk of consumers to these modes of transactions.