According to RBI, the Unified Payments Interface (UPI) achieved a phenomenal milestone of 10 billion transactions in August 2023. Learn about UPI innovations.
The Unified Payments Interface, or UPI, one of India’s digital payment systems, has achieved a remarkable feat of 10 billion transactions, or 81 per cent of the total digital transactions, according to a Reserve Bank of India (RBI) report released on September 18, 2023.
The RBI’s monthly report on digital transactions attributed this milestone to rapid merchant onboarding, increasing digital awareness, and continuous policy support.
India’s digital transactions showed strong growth both in volume and value in August, driven by UPI, contributing nearly 50 per cent of the world’s real-time transactions by volume.
The person-to-merchant (P2M) transactions have nearly doubled, with UPI facilitating the transactions of over 330 million users and 70 million merchants.
The burgeoning e-commerce in tier 2 and tier 3 cities is expected to exceed $240 billion by 2030, and retail digital payments are expected to gain further momentum. Credit card transactions also saw significant growth, with the average transaction value increasing by almost 14 per cent year-on-year in August 2023, buoyed by growth in tier 2 and tier 3 cities.
The Bharat Bill Payment System (BBPS) also saw increased usage, driven by loan repayments, LPG and piped gas payments, and FASTag recharges.
An overwhelming 70 per cent of the 511 respondents in a survey cited in the report favoured UPI over other digital transaction methods due to ease of use, swift processing, absence of cash dependence, and zero transaction costs. For transactions below Rs 50,000, UPI remained the preferred choice, with over 50 per cent of respondents choosing it. Even for higher-value transactions, 29 per cent of respondents chose UPI.
UPI has evolved into a major digital payment ecosystem, integrating bill payments, e-commerce, IPO transactions, and more. UPI’s scope has also expanded to include credit lines.
At the Global FinTech Festival on September 6, 2023, RBI Governor Shaktikanta Das unveiled a suite of payment products developed by the National Payments Corporation of India (NPCI), mostly related to UPI, and said the innovations in payment systems will enhance financial inclusivity. He announced “UPI LITE X” to address challenges in remote areas, enabling offline UPI payments and making digital transactions accessible even in low-connectivity regions.
UPI’s scope has been expanded to include bank credit lines as a funding source. Further, the “UPI Hello” feature allows users to make voice-enabled payments using UPI apps, calls, and IoT devices, initially available in Hindi and English but will soon expand to regional languages.
UPI’s linkages with fast payment systems of other nations and innovations like UPI Lite, UPI123Pay, and UPI Autopay are expected to boost UPI adoption further.