UPI Clocks 6.28 Billion Transactions, Gears Up For Greater Financial Inclusion In India

India’s real-time instant payment solution, the Unified Payments Interface (UPI) registered 6.28 billion transactions in July 2022, it's all-time highest number of transactions since its launch six years ago. 
 
As for the value of transactions, these 6.28 billion transactions were worth Rs 10,62,991.76 (or about Rs 10.63 trillion), and the number of Indian banks live on the UPI network was 338 as of July 2022, according to data received from the National Payments Corporation of India (NPCI). 
 
When directly compared with the June 2022 figures, the volume and the value of the July 2022 transactions are up by 7.16 per cent and 4.76 per cent, respectively. 

Prime Minister Narendra Modi also applauded this achievement and Tweeted about it.

“This is an outstanding accomplishment. It indicates the collective resolve of the people of India to embrace new technologies and make the economy cleaner. Digital payments were particularly helpful during the COVID-19 pandemic,” read the Tweet by PM Modi.

The recently released RBI’s digital payment index (DPI) too reached an all-time high of 349.3 points.

Dilip Asbe, CEO, NPCI said at an event on Rupay credit card and UPI linkage that UPI’s goal is to process about a billion transactions a day in the next five years, according to a report in Business Standard. 

Industry experts feel that in order to achieve this goal, the recent decision by the Reserve Bank of India (RBI) regarding linking of Rupay credit cards with UPI and other future UPI developments could play a big role.

According to Pranay Jhaveri, managing director, India & South Asia, Euronet Worldwide, a payments company, UPI has assumed the number one status when it comes to payments in India. It continues to gain in popularity and has also witnessed exponential growth on a month on month basis, he says.

Also, even before the RBI announced the linking of UPI with credit cards, UPI payments were made by linking a user’s bank account or debit card. But now, with the start of linking credit cards with UPI, it means that a user could get a line of credit if he/she chooses to pay via a UPI-credit card linked mechanism.

As to how beneficial this new system will be, Jhaveri says: “Both the consumer and small merchants will benefit, as now the UPI payment can be done with a RuPay credit card (for now, more card support to be added later), while the need for a merchant to have an expensive point of sale (PoS) terminals will get diminished.” 

Jhaveri further says that this new integration will “also solve multiple hassles in the customer payments journey, right from doing away with having to carry credit cards and swipe them at the PoS machine/fill card details online to enjoying more secured payments.” 

Ketan Patel, CEO, Mswipe technologies, a payment processing company, said that India would become financially inclusive when digital financial services will reach a large spectrum of users. 

“We will see wider acceptance of digital financial services, with consumers receiving financial literacy, transparency in the system, grievance redressal, and wider acceptance and availability of services across the country,” he adds.

“Financial inclusion requires the expansion of digital financial services from classes to the masses. Financial inclusion is the consequence of private companies and the government working together to deliver financial services to a larger population at lower costs. According to me, bringing financial services to the public is a difficult task that can be achieved by three stakeholders: the government, companies and consumers,” he says. 

Patel adds that the most crucial role in India’s financial inclusion is still played by the government. It starts with the “development of policies and regulatory frameworks that benefit consumers while making it easier for organisations to conduct business.”

Mandar Agashe, founder, managing director, Sarvatra Technologies, a payments solution company, says that today the consumer is very happily using UPI and has also understood its convenience. The easy acceptability of UPI at most of the merchants makes it so popular, he says.

That said, many people still prefer to do certain expenses via a credit card apart for the obvious benefit of paying later, along with other benefits of multiple schemes and reward points that is usually offered by credit cards.

“Now, the convenience of UPI, the credit limit, as well as the rewards points of credit cards, when all of these things come together, it will create a fantastic new payment system in the country. This will be a great showcase to the world on how it can be done,” he adds.

Kishan Sundar, senior VP, digital business unit, Maveric Systems, a banking technology service provider company, says that with better data coverage in "tier 2/3 cities along with the support in offline payments and democratization of payments, we would see further innovation happening in payment tech by fintechs, along with the aggressive dynamic adaption from the banks."

Are There Any Possible Challenges In Implementing UPI-Credit Card System?

According to Agashe, the credit card system has a different platform with its own billing system and its own charge back system, among others.

The current UPI system uses debit cards for on-boarding customers, and then in the back end, it uses their bank account as well as the core banking solution (CBS) and the UPI infrastructure system for further processing.

“Therefore, now banks need to build a technology bridge between the credit card platforms that they have and their regular UPI systems. In simple terms, a UPI switch has to be integrated with a credit card switch,” says Agashe.

He says this “won’t be a major challenge as most of the systems today are interoperable and banks are also used to it. Today, most of the banks not only have UPI, but they also have IMPS and AePS, and they are used to handling multiple platforms at the same time.” 

Agashe explains with an example. “It is possible to make these platforms interoperable. For example, when you use UPI on ATMs, it is already on two different systems that are talking to each other. Something similar can be done between a credit card platform and a UPI system of the bank,” he adds.