On June 17, 2022, the Reserve Bank of India (RBI) released its Payments Vision document related to the evolving and future scope of the digital payment landscape in India.
UPI trumps credit and debit cards at 34 per cent against 8 per cent in terms of volume at merchant transactions. UPI sees increasing usage in micro transactions over cash as well, says Worldline research report
On June 17, 2022, the Reserve Bank of India (RBI) released its Payments Vision document related to the evolving and future scope of the digital payment landscape in India.
It highlighted among others how it planned to provide every user with “safe, secure, fast, convenient, accessible, and affordable e-payment options” anchored on the five pillars of integrity, innovation, internationalisation, institutionalisation, and inclusion.
It had also identified and listed 40 initiatives that would in future super-charge digital payments, both from a transactions perspective as well as convenience and safety, among others. These included things, such as regulation of BigTechs and FinTechs in payments space, weaving in alternate authentication mechanism(s) for digital payment transactions, facilitating framework for IoT and context-based payments, and finally, make payment systems more inclusive and accessible to all.
Now it seems that RBI’s vision is well on track, if a recent report on India’s digital payment by a leading French multinational payment and transactional services company, Worldline, is to go by.
In the April – June quarter of 2022, a huge 20.57 billion transactions in volume estimated at Rs 36.08 trillion in terms of value were processed in India through various platforms. These platforms include, India’s ubiquitous Unified Payments Interface (UPI), which includes both person to merchant (P2M) and person to person (P2P) transactions, debit and credit cards, and prepaid payment instruments, such as mobile wallets and prepaid cards, the India Digital Payments Report by Worldline said.
According to the report, UPI P2P accounted for 49 per cent in volume and 67 per cent in value, while in terms of merchants’ transactions, UPI P2M emerged as the preferred payment mode with a market share of 34 per cent in volume and 17 per cent in terms of value.
“Payments through credit and debit cards accounted for 8 per cent in volume and 14 per cent in value. While UPI remains a dominant payment mode, adoption of credit cards is growing at a healthy pace it remains the preferred mode for high ticket size transactions,” the report said.
The most interesting metric, according to the report, was the difference between UPI P2P and P2M average ticket size, where the latter was found to be a third of the former.
“This, however, should be seen as a success because it means that even micro-transactions are going through UPI instead of cash,” the report said.
In Q2 2022, UPI clocked over 17.4 billion transactions in volume worth Rs 30.4 trillion in terms of value. Transactions volume and value have seen an increase of about 118 per cent increase in volume and over 98 per cent in value in Q2 2022 as compared to Q2 2021.
The top remitter banks were State Bank of India, HDFC Bank, Bank of Baroda, Union Bank and Paytm Payments Bank, while the top beneficiary banks were Paytm Payments Bank, Yes Bank, SBI, Axis Bank and ICICI Bank.
The report said that frequently visited physical merchant categories, such as grocery stores, restaurants, clothing and apparel, pharmacy and medical, hotels, jewellery retail, specialty retail, household appliances and departmental stores together accounted for over 61 per cent in terms of volume and about 58 per cent in terms value.
In the online space, e-commerce (shopping for goods and services), gaming, utility and financial services contributed to over 86 per cent of transactions in terms of volume and 47 per cent in terms of value. Education, travel, hospitality and the government sector contributed remaining 14 per cent transactions in terms of volume and 53 per cent in terms of value.
Top States Which Performed Well
The top-10 states with the highest number of transactions at physical touch points in Q2 2022 were:
1. Maharashtra
2. Tamil Nadu
3. Karnataka
4. Andhra Pradesh
5. Kerala
6. Gujarat
7. Delhi
8. Uttar Pradesh
9. Telangana
10. West Bengal
The top-10 cities were:
1. Hyderabad
2. Bengaluru
3. Chennai
4. Mumbai
5. Pune
6. Delhi
7. Kolkata
8. Coimbatore
9. Ahmedabad
10. Vadodara