UPI clocks in INR 8.26 Lakh Cr Worth Transactions in December 2021
With a 0.91% increase in the number of monthly transactions, UPI recorded 456 Cr transactions worth 8.26 Lakh Cr (about $ 111.2 billion) in December.
Despite the start of the third wave of Covid-19, which should have reflected weak market spending sentiment, 2021 was quite the opposite, with UPI alone recording transactions worth over INR 73 Lakh Cr (around $ 970 billion)
As the market continues to grow more than 110% year-on-year, the leaders of UPI PhonePe and Google Pay must reduce their market share.
Ending the year at an all-time high, in December 2021, UPI recorded 456 Cr of transactions worth INR 8.26 Lakh Cr ($ 111.2 billion). Up 0.91% from November 2021, when UPI recorded 418 Cr transactions worth INR 7.68 Lakh Cr (around $ 102.4 billion), the year ended with digital payments at their highest.
On its own, UPI recorded transactions worth over 73 INR Lakh Cr (around $ 970 billion) during CY21 – an increase of over 110% year-over-year compared to transactions. valued at 33.87 INR Lakh Cr during CY20.
According to NPCI data, October 2021 had recorded 421 Cr transactions worth INR 7.71 Lakh Cr (around $ 103 billion), an increase of 15.3% month-on-month (MoM), including a major could be attributed to the holiday season. Meanwhile, in November, NPCI saw a drop of 0.39% in the UPI value and 0.71% in the number of transactions.
In November 2021, PhonePe topped the UPI figures with 191 Cr transactions worth INR 3.65 Lakh Cr. Google Pay maintained its second lead with transactions of 144 Cr worth 2.83 Lakh Cr. Next come Paytm (631 million transactions worth 81,403 Cr INR); Amazon Pay (71 million transactions worth 6,041 Cr INR) and WhatsApp Pay (2.11 million transactions worth 150 Cr INR).
Contactless digital payments such as mobile wallets and UPIs continue to gain traction even after conditions brought on by the Covid-19 pandemic begin to ease. Compared to December 2020, when UPI transactions were only 223 Cr valued at INR 4.16 Lakh Cr, December 2021 saw a jump of over 98%.
The digital payments market is expected to reach 7,092 INR Lakh Cr in India by 2025. In addition, the current 160 million unique mobile payment users are expected to grow fivefold to almost 800 million by 2025.
As the market grows, market leaders must grow negatively
Last year, the NPCI directive asked third party application providers (TPAPs) to cap their transaction value at 30% by December 2023. PhonePe and Google Pay currently hold 47% and 34% of the share of UPI payments market respectively, and they seem to be struggling to cap their limits.
This measure aims to avoid the formation of an oligopoly while encouraging competition. This is the same reason why WhatsApp has not been allowed to take advantage of its payment platform for more than 500 million users in the country. In fact, its initial deployment was limited to 20 million users. But in relief from Meta-owned WhatsApp Pay, NPCI recently allowed it to double the number of users on its payments platform in India to 40 million people.
The changing face of the IPU in India
In an effort to expand the reach of digital payments in the country, the RBI further proposed to introduce UPI for users of multifunction phones. He observed that around 74 Cr cell phone users have smartphones in the country out of a total of 118 cell phone users. Thus, it aims to bring a significant number of multifunction phone users to the country as part of digital payments.
Not only that, RBI maintained that 50% of transactions through UPI were below INR 200. Although using UPI for low value transactions means real-time payment service is quite the go-to digital feature for Indians, it consumes significant system capacity and banking resources. It also causes inconvenience for customers due to transaction failures due to connectivity issues.
In an effort to facilitate the process of low value transactions, RBI proposed to offer a simpler process for these transactions through an “on-device” wallet in the UPI app. It aims to conserve the system resources of banks, without any change in the transaction experience for the user – quite similar to a wallet system offered by Paytm, Amazon Pay and PhonePe.
UPI – Outside India
UPI, or Unified Payments Interface, is a real-time payment system (RTP) enabling person-to-person (P2P) and person-to-merchant (P2M) transactions.
With the relaxation of travel restrictions between India and the United Arab Emirates, the international arm of NPCI recently signed a memorandum of understanding with Network International of the United Arab Emirates. While UPI will leverage Network International’s payment infrastructure and network power, NI will leverage UPI’s real-time instant payment system.
Previously, in August 2021, NIPL announced its partnership with Mashreq Bank, a UAE-based digital banking solutions provider to bring UPI to the UAE. In July 2021, NPCI also partnered with the Royal Monetary Authority (RMA) of Bhutan to implement UPI-based payments in Bhutan, making it the first foreign country to adopt the UPI.
Other successful international partnerships in this space include Discover Financial Services (DFS) USA, Japan Credit Bureau (JCB) Japan, Union Pay International (UPI) China, PPRO Financial, UK, Network for Electronic Transfers (NETS), Singapore and Liquid Group, Singapore.