UPI – The Biggest Industry Disruptor for Payments in India

Introduction

The National Payments Corporation of India (NPCI) is a non-profit organization that operates and manages various payment systems in India. NPCI was founded in 2008 with the goal of creating a robust and efficient payment infrastructure in the country.

One of the most popular payment systems operated by NPCI is the Unified Payments Interface (UPI). UPI is a real-time payment system that allows users to transfer money between bank accounts instantly using a mobile device. UPI is a simple, safe, and convenient way to make payments without the need for cash or credit cards. May 2021 was the inflection point when UPI payments clocked higher transaction value than cheque payments, after which UPI has till date been the leader as the most preferred payment infrastructure.

In addition to UPI, NPCI operates several other payment systems, including the National Electronic Funds Transfer (NEFT), Immediate Payment Service (IMPS), and Bharat Bill Payment System (BBPS). Each of these systems has its own unique features and advantages, making them suitable for different types of transactions and use cases.

In summary, NPCI payment systems, including UPI, have revolutionized the way Indians make payments by offering a fast, secure, and convenient way to transfer money between bank accounts. With the continued growth and adoption of these systems, India is well on its way to becoming a cashless society.

Unified Payments Interface (UPI)

To use UPI, users need to download a UPI-enabled mobile app from their bank or a third-party provider. Post registration and linking of bank account to the app, a user can send and receive money using a virtual payment address (VPA), mobile number, or account number and IFSC code.

UPI transactions are processed in real-time, which means the money is transferred instantly between the sender and receiver’s bank accounts. UPI also supports transaction requests and bill payments, making it a versatile payment system.

One of the key advantages of UPI is that it is interoperable, meaning users can transfer money between different banks and payment apps seamlessly. UPI is also highly secure, with transactions protected by two-factor authentication and encryption.

The UPI dashboard offers comprehensive insights into UPI transactions and volume. In financial year 2021-22, the total number of transactions done via UPI were 4,596.8 crores (~ 46 billion) through which the total value transacted was INR 84,27,572.5 crores (US$ 1.02 billion). The dashboard provides detailed analysis of the number of transactions, transaction value, and the number of UPI enabled apps and banks.

Datachamps’ Analytical Report on Payments Data

The growth of UPI transactions in India has been significant, our report indicates various analyses around this. The number of UPI transactions in India has increased from around 10 million in August 2016 to over 2 billion in December 2021. This growth is a testament to the popularity and convenience of UPI as a payment system. Page 2 of the report offers the trend and composition of various payment methods.

On selecting the payment method, Page 3 of the report offers an insight on the average ticket size of transactions. This slide also has the six months CMGR of payment transactions. Page 4 highlights the average monthly transaction value and volume trend which can be sliced by a selected period. Page 5 of the report highlights the cash withdrawal analysis; and page 6 of the report gives an opportunity to do a side-by-side analysis of the various available payment methods to compare their performance.

UPI Enabled Apps and Banks

The UPI dashboard offers comprehensive insights into UPI transactions and volume. Page 7 of the report highlights these trends. A user can drill down on the bar chart to see monthly trends as well. The dashboard provides detailed analysis and historical data on the number of transactions, transaction value, and the number of UPI-enabled apps and banks. The dashboard also provides statistics on payment systems and compares UPI’s performance to traditional payment systems like POS, credit card, and debit card.

The report also provides information about the top 5 UPI-enabled apps and banks based on the volume and transaction value. This information aids various stakeholders like governments, regulators, businesses & individuals, academicians, etc. in their own field of work to make informed decisions. The top 5 UPI-enabled apps include PhonePe, Google Pay, Paytm, Cred, and Yes bank app. These apps have captured a significant market share, with Google Pay and PhonePe leading the way as seen in Page 8 of the report.

In terms of banks, the top 5 banks in terms of UPI transaction volume are, Yes Bank, Axis Bank, ICICI Bank, Paytm Payments Bank, and State Bank of India (SBI) as can be seen in Page 9 of the report. This slide also offers insight into the payer and payee bank Technical Decline (TD) & Business Decline (BD) ratios. Banks play a significant role in the UPI ecosystem, and their UPI-enabled apps have been instrumental in promoting the use of UPI among their customers.

Page 10 of the report dives into the payment infrastructure analysis in the context of banks throwing light on the credit and debit transaction values and volumes and Page 11 gives details of the card statistics analysis comparing credit/debit card transactions with UPI transactions which can be sliced by selected bank/s.

UPI has become a game changer, especially as it aids in broadening digital financial inclusion through the payments ecosystem. It is only a matter of time as this tool creates immense changes in the way individuals and businesses make payments and manage their finances.

N.B.: Please refer to Page 12 for Glossary. A user can navigate the dashboard through the index available via the button on the left top corner. For changing the denomination, operator or payment method, one can select the filter option provided on every page.