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The Unified Payments Interface (UPI) reported yet another record high in August, both in terms of volume and value of transactions. It saw 6.57 billion transactions, amounting to Rs 10.72 trillion, up 4.62 per cent and 0.95 per cent on a month-on-month (MoM) basis, in terms of volume and value of transactions, respectively.
According to the data put out by the National Payments Corporation of India (NPCI), the volume of transactions rose 85 per cent and value 67.85 per cent year-on-year (YoY).
Last month, UPI breached the 6-billion levels in volumes for the first time since its inception in 2016.
In 2022, UPI facilitated around 45 billion transactions worth Rs 77.94 trillion. And, in FY23 (till August), cumulatively, UPI has recorded over 30 billion transactions worth Rs 51.74 trillion. This is almost 65 per cent of the transactions reported in the whole of FY22. And, in the first five months of FY23, UPI transactions are almost 1.35 times the transactions reported in FY21.
In FY22, UPI processed more than 46 billion transactions amounting to over Rs 84.17 trillion, thus breaching the $1 trillion mark. And, in FY21, it processed 22.28 billion transactions, amounting to Rs 41.03 trillion. So, both volume and value of transactions doubled in a year’s time, indicating the meteoric rise seen in the adoption of digital payments, especially UPI, in the country.
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The Covid-19 pandemic has accelerated the adoption of digital payments. Apart from a few hiccups during the first two waves of the pandemic, UPI transactions have been on an upward trajectory, mirroring the recovery in the broader economy. This is reflected in the Reserve Bank of India’s (RBI’s) digital payment index, which has risen from 207.94 in March 2020 to 349.30 in March 2022. This index indicates the extent of digitization of payments across the country.
The next target for UPI is to process a billion transactions a day in the next 3-5 years.
Recently, the RBI floated a discussion paper, seeking comments from stakeholders on whether UPI transactions should be charged. The RBI has asked if UPI transactions are charged, then should the merchant discount rate (MDR) be imposed based on the transaction value or should a fixed amount be charged as MDR irrespective of the transaction value.
Further, it has sought feedback on whether the RBI should decide on the charges, or the market be allowed to determine if charges are introduced at all. RBI also sought feedback from stakeholders on the possibility of imposing a “tiered” charge on payments made through the UPI, based on different amount bands.
This prompted the government to reiterate that UPI is a public good, and that it is not considering levying any charges for UPI services.
