The transactions made through the Unified Payments Interface (UPI) dropped in February. However, experts think that the apparent decline is only because of the fact that February has three fewer days than January, which naturally affects the total number of transactions.

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In a conversation with CNBC-TV18.com, Jaikrishnan G, Partner and Financial Services Consulting at Grant Thornton Bharat said that it is common for the number of transactions and their value to decrease in February, as seen in the previous year.

"If we look at year-on-year growth, there has been a significant increase of 66 percent in the number of transactions and a 49 percent increase in their value," Jaikrishnan told CNBC-TV18.com.

Taking a closer look at the daily average number of transactions and their value indicates a positive trend, he said, with a 3.8 percent increase in daily average transactions and a 5.4 percent increase in their overall value.

According to data from the National Payments Corporation of India (NPCI), UPI transactions fell by 4.8 percent month-on-month (MoM) to Rs 12.36 lakh crore in value terms in February from Rs 12.98 lakh crore in January. The total volume of UPI transactions also dropped 6.2 percent to 753.47 crore.

If we look at the growth rate in UPI in January 2023, there is a decline in both volume and value terms on year-on-year basis. However, despite the decline, Reserve Bank of India (RBI) believes that the user penetration rate of digital payments in India is likely to exceed that of the world.

As per RBI’s February 2023 bulletin, the growth rate in Unified Payments Interface (UPI) transactions stood at 74.1 percent year-on-year in January 2023 in volume terms.

(Source: Bank of Baroda)

Looking at data trends of calendar year 2022, it is clear that UPI network saw a rise in the transaction count in the first quarter. However, the second quarter remained a bit slow. Experts attribute this slowdown to approaching maturity in the UPI ecosystem.

Exponential growth

Interestingly, recently RBI said UPI payments have grown exponentially in the past 12 months with daily transactions crossing 36 crore, which is up 50 percent from 24 crore in February 2022.

The UPI was launched in 2016, and since then it has emerged as the most popular and preferred payment mode, pioneering person-to-person and person-to-merchant transactions accounting for 75 percent of total digital payments.

The volume of UPI transactions has increased manifold from 0.45 crore in January 2017 to 804 crore in January 2023, as per a PTI report.

The value of UPI transactions has increased from just Rs 1,700 crore to Rs 12.98 lakh crore during the same period.

(Edited by : Shoma Bhattacharjee)