Unified Payments Interface (UPI) has surpassed 10 billion transactions in the month of August, marking a pivotal moment in the nation's digital payments narrative. To put this milestone into perspective, it's approximately 2 billion more than the entire global population.

The rise of UPI

The journey to this feat has been marked by a steady ascent in both transaction volume and value. In July, UPI witnessed close to 9.96 billion transactions, a figure that soared past the 10 billion mark in August. In terms of value, August recorded over 15 lakh crores rupees worth of transactions conducted via UPI.

(Source: NPCI)

UPI monthly transactions

(Source: NPCI Data)

The journey to successive billion transactions on UPI has been consistently shortening. From taking three years to achieve the first billion, it now takes a mere three to four months to reach the next billion, with the tenth billion being accomplished in just three months.

UPI monthly transaction volumes

The popularity of UPI is undeniable, commanding a lion's share of over 75 percent in all retail digital transactions within India. With more than 330 million unique users and over 70 million daily-using merchants deploying 256 million QR codes, PhonePe, Google Pay, and Paytm collectively contribute to a staggering 96.5 percent of the total UPI transaction count.

UPI in India

UPI accounts for over 75 percent of all retail digital transactions in India. It has around 330 million unique users. Over 70 million merchants actively utilise UPI, using 256 million QR codes. PhonePe, Google Pay, and Paytm lead the list of top UPI apps.

Comparatively, UPI is outpacing other digital payment systems with a remarkable 58 percent year-over-year growth in July, leaving RTGS, NEFT, IMPS, and other forms far behind.

Growth in select payment systems: July 2023 (% YoY)

(Source: RBI Data)

Undoubtedly, UPI's reach is extending beyond India's borders, with recent agreements in countries like France and Singapore. Non-Resident Indians (NRIs) in multiple countries, including Singapore, Australia, Canada, USA, and the UK, can now employ UPI. Worldline has also facilitated UPI transactions for Indian tourists visiting Europe, showcasing its global potential.

However, the rapid growth of UPI is not without its challenges. The scenario of zero charges for UPI payments presents profitability hurdles for banks and payment apps. Moreover, the surge in UPI-related frauds, escalating from 77,000 in FY21 to over 95,000 in FY23, underscores the need for enhanced security measures.

While UPI has firmly positioned India on the global payments map, its success abroad remains uncertain as it expands further.

So, what's next?

The future for UPI promises continued expansion, with the Reserve Bank of India (RBI) foreseeing it accounting for 90 percent of all retail digital transactions in the next five years.

The National Payments Corporation of India (NPCI) is targeting around one billion transactions per day, a threefold increase from current figures, within the next two to three years. Offline UPI is expected to drive the next phase of its expansion, promising exciting developments on the horizon.

First Published:Sept 1, 2023 9:22 AM IST