United Payments Interface (UPI) transactions crossed another milestone in September, breaching the Rs 6.50 lakh crore mark. UPI transaction value had crossed the Rs 6 lakh crore mark in July.
The National Payments Corporation of India’s (NPCI) flagship payment platform saw transactions worth Rs 654,351 crore from 365 crore transactions in September.
UPI payment volumes have witnessed significant growth since the beginning of the pandemic as individuals transacted online more than ever and the rate of merchant adoption picked pace.
Since the beginning of 2021, monthly transaction values have grown by close to 52 percent from Rs 4.31 lakh crore in January. Volumes have seen a jump of over 58 percent from January’s 230 crore.
While it took over four years since the launch of UPI in 2016 for monthly transaction values to cross the Rs 3 lakh crore mark in September 2020, the number more than doubled to cross Rs 6 lakh crore in less than a year by July 2021.
So far, since March 2021, the average monthly growth rate of UPI transactions has been 5.8 percent. If this rate is sustained for the remainder of the fiscal year, overall transactions values are likely to cross $1 trillion for FY22.
The next trigger for growth in UPI volumes could come from the festive season starting with the nine-day festival of Navratri on October 7.
Speaking at the Global Fintech Fest on September 29, NPCI MD and CEO Dilip Asbe had said that UPI may clock in transactions worth $1 billion a day as early as three years from now.
“If we maintain status quo, we should achieve transactions worth $1 billion a day in five years. But we must leverage this accelerated speed of adoption caused by demonetization and subsequently Covid-19. The payments ecosystem must continue to innovate and double up the efforts to achieve this in three years,” Asbe had said.
In terms of transaction volumes, Asbe said that UPI will constitute close to 60 percent of overall NPCI transaction volumes in 2021.
“If we maintain status quo, we should achieve that in five years. But we must leverage this accelerated speed of adoption caused by demonetization and subsequently Covid-19. The payments ecosystem must continue to innovate and double up the efforts to achieve this in three years,” Asbe had said.
The upward trajectory was also fueled by the Zero Merchant Discount Rate (MDR) policy that came into effect in January 2020, which led to more merchants accepting digital modes of payment.
MDR refers to the charges levied to merchants for using digital payment modes. Under the policy, merchants should not be levied any charges on digital payments made through UPI, RuPay debit cards and UPI QR codes. The policy also mandates companies with a turnover of over Rs 50 crore to make low-cost modes of payments available.
“We are seeing 300 million monthly active users. Over 50 million merchants are accepting digital payments, including small merchants. This is a very healthy sign for the digital payment ecosystem,” Asbe had added.
In the UPI ecosystem, the apps that lead the transactions are PhonePe, Google Pay and Paytm Payments Bank.
While NPCI is yet to release the app-wise transaction data for September, PhonePe continued to dominate transactions in August with a volume share of 47 percent followed by Google Pay at 35 percent.