India’s ubiquitous Unified Payments Interface (UPI) grew by 56 per cent year-on-year (y-o-y) in H2 2023 to 65.77 billion, up from 42.09 billion in H2 2022, while the total value of transactions surged by 44 per cent from Rs. 69.36 trillion to Rs. 99.68 trillion during the same period, according to the latest data from the India Digital Payments Report for H2 2023.
UPI remained the dominant player in the payment system in India, though the average ticket size declined by 8 per cent from Rs. 1,648 to Rs. 1,515. This decline was predominantly propelled by the surge in person-to-merchant (P2M) transactions, according to the report.
The following are the key findings of the report.
Key Findings
Increase In Point Of Sale Terminals: The report said that the point of sale (PoS) terminals grew by 26 per cent to 8.56 million, with private sector banks dominating the space with 73 per cent market share and public sector banks accounting for 18 per cent.
Bharat QR (BQR) usage grew by 32 per cent to 5.96 million, while UPI QRs grew by 57 per cent to 317 million. Private and public banks, such as Axis Bank, ICICI Bank, HDFC Bank, State Bank Of India, RBL Bank, Paytm Payments Bank, IndusInd Bank, Kotak Mahindra Bank, Yes Bank, and Canara Bank accounted for 94 per cent of terminals deployed as of December 2023, the report said.
P2P And P2M Transactions: Person-to-merchant (P2M) transactions grew by 77 per cent, up from 21.84 billion in H2 2022 to 38.73 billion in H2 2023, while the value of transactions grew from Rs. 15.66 trillion to Rs. 25.43 trillion in the same period, a growth of 62 per cent y-o-y.
Elsewhere, people to people (P2P) transactions grew from 20.25 billion in H2 2022 to 27.04 billion in H2 2023, a growth of 34 per cent y-o-y. Concurrently, the value of P2P transactions grew from Rs 53.69 trillion to Rs 74.24 trillion, a growth of 38 per cent.
Average Ticket Size: The average ticket size of all UPI transactions fell from Rs. 1,648 in H2 2022 to Rs. 1,515 in H2 2023, a decrease of 8 per cent. For P2P transactions, the average ticket size grew 4 per cent y-o-y from Rs. 2,649 to Rs. 2,745, while that for P2M transactions decreased from Rs. 720 to Rs. 656, a drop of 9 per cent.
Top UPI Apps, Remitter, And Beneficiary banks: In terms of volume and value, PhonePe, Google Pay and Paytm were the dominant UPI app players. In December 2023, these three apps accounted 95.4 per cent of all the transactions in terms of volume, while in terms of value they together comprised 93 per cent in December 2023, compared to 92.2 per cent in the same period last year.
Credit, Debit And Prepaid Cards: The total number of cards in circulation grew modestly, up by 6 per cent to 1.384 billion. Credit cards saw the highest growth y-o-y at 21 per cent to 97.9 million, followed by prepaid cards at 13 per cent to 325 million and debit cards at 2 per cent to 960.80 million, according to the report.
The top-five issuers of credit cards were HDFC Bank, SBI, ICICI Bank, Axis Bank and Kotak Mahindra Bank, while the top-five issuers of debit cards were SBI, Bank of Baroda, Canara Bank, Union Bank of India and HDFC Bank.
According to the report, a whopping 71 per cent of credit cards were issued by private sector banks and 24 per cent by the public sector banks, while 65 per cent of debit cards were issued by public sector banks and 24 per cent by private sector banks.
This distinction of private sector banks dominating credit card issuance and public sector banks dominating debit card issuance was a clear indication of the higher risk appetite among the private sector banks, the report said. “The latter (public sector banks) are focused on providing accounts to a larger section of the population including the unbanked,” the report said.
Incidentally, the volume of card transactions in H2 2023 declined by 7 per cent to 3.70 billion, predominantly propelled by debit card transactions, whereas credit card transactions experienced an upswing. Debit card transactions in H2 2023 were recorded at 1.15 billion, down by 34 per cent y-o-y, while credit card transactions were up by 21 per cent y-o-y to 1.78 billion.
“The value of card transactions in H2 2023 was Rs 12.66 trillion, an increase of 13 per cent from H2 2022. This growth was largely supported by credit cards. Credit card transactions value in 2023 was Rs. 9.39 trillion, a strong rise of 11 per cent from H2 2022 while, during the same period, debit cards transaction value was Rs 3.02 trillion, a fall of 16 per cent, and prepaid cards were Rs. 241 billion, a fall of 30 per cent,” the report said.
The average ticket size for all cards was Rs 2,742, up by 10 per cent y-o-y, primarily driven by debit cards, the report said.
The report said that UPI transactions were dominating other channels, both at PoS and online.
Ramesh Narasimhan, Chief Executive Officer-India, Worldline, said in a statement: “The year 2023 witnessed some significant milestones in the payments ecosystem. UPI maintains its position as the uncontested frontrunner, buoyed by substantial expansion in mobile transactions. This trend underscores users’ growing confidence and familiarity with smartphone-based payment methods. The proliferation of PoS terminals has reached unprecedented levels, concurrent with the ascendance of mobile payments as a dominant transaction avenue. This underscores the necessity for FinTechs to adjust to a diverse array of payment channels.”
