Continuing its record performance, the unified payment interface (UPI) digital payment ecosystem reported a 16% spike in transaction volumes and 11% hike in transaction value on a month on month basis during July 2021. The record performance comes ahead of the launch of eRUPI, which is a voucher-based payments mode based on UPI, being unveiled by the Indian government today (August 02).
During July, the National Payments Corporation of India (NPCI) clocked a record 3.24 Bn transactions, up 15.7% month on month. It also reported transactions worth INR 6.06 Lakh Cr up 10.8% month on month.
The previous best performance was in June when it crossed 2.8 Bn transactions worth INR 5.47 Lakh Cr. UPI usage has been on an uptick through the pandemic with large sections of the population adopting the contactless payment solution for in-store transactions.
Launched in 2016, UPI transactions volume saw the first massive dip in April 2020, after falling below the 1 Bn mark to 990 Mn, while the value of transactions dropped to INR 1.51 Lakh Cr. This fall was in the wake of the Covid-induced lockdown and restrictions that shut down all major services including traveling, dining out, ecommerce and offline transactions.
After recovering post May 2020, UPI crossed the 2 Bn transaction mark in October 2020. In March 2021, UPI had reported its best-ever figures with 2.73 Bn transactions amounting to INR 5.04 Lakh Cr. The lockdowns imposed during the second wave from April 2021 severely impacted payments. But with the economy reopening since June, UPI transactions have gone through the roof.
Pandemic Has Boosted UPI And Digital Payments
While UPI growth may be just one indicator of the popularity of digital payments the Reserve Bank of India’s (RBI) digital payments index (DPI) in March 2021 rose to 270.59, compared to 207.84 for March 2020, indicating a robust growth in digital transactions during the Covid-hit year in the country. The central bank announced the construction of the composite Reserve Bank of India (RBI) – Digital Payments Index (RBI-DPI) with March 2018 as the base period to assess the extent of digitization of payments in the country.
The index – RBI-DPI comprises five broad parameters which allow the measurement of the extent and penetration of digital payments in the country across different time periods. The five parameters are as follows:
- Payment Enablers (weight 25%)
- Payment Infrastructure – Demand-side factors (10%)
- Payment Infrastructure – Supply-side factors (15%)
- Payment Performance (45%)
- Consumer Centricity (5%)
These parameters have sub-parameters that consist of measurable indicators for the penetration of digitisation. Payment enablers such as bank accounts, Aadhaar, mobile, internet, among others constitute 25% of the overall index.
The digital payments index is also a measure of calculating the growth of the country’s cashless economy for the government. Earlier this year, the RBI stated that the DPI for March 2019 and March 2020 work out to 153.47 and 207.84 respectively, indicating an appreciable growth.
As reported earlier by Inc42, a large part of the usage is coming from in-store UPI payments across tier 2 and 3 cities where credit and debit cards failed to find mass acceptance.