December is shaping up to be another big month for Unified Payments Interface (UPI) transactions, with each of the first six days recording more than 700 million transactions, data available with the National Payments Corporation of India, which operates the instant payment system shows.
Of the six days, first five also recorded over Rs 1 lakh crore in transaction value, which is another record.
The festival month of October, considered shopping-heavy, had only eight days where transactions crossed 700 million in a day, four of which were around Diwali. November had only three days of over 700 million transactions.
The daily UPI transactions crossed 700 million for the first time on August 2.
On December 6, transaction value was Rs 96,000 crore, just 4 percent shy of the Rs 1 lakh crore mark.
The government had set a billion (100 crore) transactions a day goal for UPI, which seems closer with the platform set to reach the target sometime next year at the current rate.
UPI transactions reached an all-time high of around 20.7 billion in volume, with a value of Rs 27.3 lakh crore in October.
The role of new fintechs
The mobile payments platform accounts for 85 percent of all digital transactions in the country. Popularised by apps such as PhonePe, Google Pay and Paytm, the platform has seen renewed interest from fintech startups in the last couple of years, with the pecking order changing after the entry of Sachin Bansal-led Navi and Flipkart-backed super.money.
The lack of a merchant discount rate (MDR), a commission paid by merchants to payment firms and banks for facilitating the digital transactions, has forced fintechs to take the credit route through UPI.
A lot of these new fintechs are betting on Rupay credit card, which can be linked to a UPI account for merchant payments, to bolster revenue through the payments platform. Credit transactions through UPI have MDR.
Banks and payment firms have been requesting the government to charge MDR for high-value transactions and large merchants.
The Centre has also reduced the annual subsidy for UPI by a third in the last financial year, pushing many fintechs to explore credit options.
October fireworks
In October, daily volume hit new highs multiple times. On Diwali eve, UPI transaction volume soared to a record 754 million. December is yet to surpass that daily record.
The average daily volume was around 668 million in October, a 2 percent month-on-month increase over the previous record of 654 million in September.
The average daily value in October was around Rs 88,000 crore, compared to Rs 83,000 crore in September.
It is difficult to predict whether December will cross either of these average daily records.
Most payment methods tend to hit their monthly highs during the first few days of the month because of salary, EMI payments and other such transactions. Consumers tend to make a lot of purchases soon after their salary is credited.
UPI payments hit more than a lakh crore daily transaction value during the first few days of a month to fall to Rs 60,000 crore by the middle of the month. October was an exception because of Diwali festivities.
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