The digital payment frontier in India has witnessed a significant shift as UPI (Unified Payments Interface) transactions have recorded a dramatic rise, leaping from 151 million in January 2018 to a staggering 9.3 billion by June 2023. This surge emphasises the nation's swift adoption of the UPI platform for their transactional needs, with a notable increase in Person-to-Merchant (P2M) transactions, said a newly released report.
In a detailed report released by Worldline, the ascendancy of UPI in the digital payment domain has been highlighted. The report found that P2M transactions, which constituted 40.3% of all UPI exchanges in January 2022, grew to represent 57.5% by June 2023. The data further indicated that the average ticket size for UPI P2M transactions underwent a decrease, moving from Rs 885 in January 2022 to Rs 653 in June 2023, hinting at the platform's growing popularity for routine and smaller-value transactions.
Ramesh Narasimhan, Chief Executive Officer – India, Worldline, weighed in on these developments, noting the broader patterns of digital payment adoption in both rural and urban sectors across the country.
“Every passing month serves as a testament to the rapid adoption of digital payments. Looking back at the first half of 2023, I find myself even more optimistic about the payment trends unfolding in India; the impressive performance of UPI, the surge in credit card usage, the jump in mobile payments volume, and the uptick in small ticket size of P2M transactions,” said Narasimhan.
“All this indicates that broad swathes of the country, rural and urban, are embracing digital payments. The allure of digital payments beckons both consumers and merchants alike, evolving it into an indispensable facet. As the payments landscape of India continues to grow, we at Worldline are enabling secure, hassle-free, and timely payments to suit our customers evolving needs,” he added.
The report also delved into various other metrics and trends within the digital payments sphere, shedding light on the evolving dynamics and consumer preferences in India's rapidly transforming financial landscape.
H1 2023 saw grocery stores, restaurants, service stations, clothing stores, government services, pharmacies, and hospitals as the top In-Store merchant categories. In contrast, the online space was dominated by e-commerce, gaming, utilities, government, and financial services.
Payments acceptance infrastructure experienced growth between January 2022 and June 2023. PoS terminals saw a 44% growth, BQRs rose by 21%, and UPI QRs, impressively, surged by 79%. The RBI's PIDF scheme aided the growth in PoS terminals, while private companies primarily drove UPI QR growth.
UPI remains the leading payment channel in India
UPI remains the leading payment channel in India. The volume of UPI transactions rose from 4.6 billion in January 2022 to 9.3 billion in June 2023, and the transaction value also mirrored this growth trend. Additionally, the UPI system has witnessed broad acceptance across both urban and rural parts of India.
Comparing H1'23 to H1'22, UPI transactions saw a volume increase of 62%. Interestingly, the average ticket size dipped by 10%, a shift mainly attributed to the growth in P2M transactions.
The report indicates that while both P2P and P2M UPI transactions saw growth, the rise in P2M transactions was more pronounced. Factors such as zero transaction fees for merchants and the quest for secure, timely payments have influenced the shift towards P2M transactions.
Regarding the top UPI apps, PhonePe, Google Pay, and Paytm lead the sector in volume and value.
For cards, the circulation numbers grew modestly over 18 months. In June 2023, credit cards stood at 88.68 million, debit cards at 975.8 million, and prepaid cards at 312.1 million. Credit cards witnessed a transaction volume surge in H1'23 by 19.6%, while debit and prepaid cards saw decreases.
Mobile payments have also seen significant growth. The number of transactions increased by 55.4% from H1'22 to H1'23, and the transaction value surged by 38.9% during the same period.
Net Banking (NB) saw a modest growth. H1'23 reported a volume of 2.13 billion NB transactions, a 1.4% increase from H1'22. The transaction value also went up by 5.9%.
Electronic Toll Collection (ETC) continues to facilitate road journeys. The number of issued tags rose from 45.97 million in January 2022 to 71.92 million in June 2023. Transactions in H1'23 were 1.85 billion, marking a 17.6% growth from H1'22.
The report asserts that digital payment mechanisms, especially UPI, will continue to gain traction in India, transforming the country's financial landscape.