UPI Enters 2020 On A High With 7% Growth In Volume And Value

After crossing 1 Bn transactions in late September, the number of unified payments interface (UPI) transactions ended 2019 with 1.31 Bn transactions in December 2019. This was 7.37% M-o-M growth from 1.22 Bn transactions recorded in November 2019.

The National Payments Corporation of India’s (NPCI) data showed that the value of UPI transactions for December was INR 2.02 Lakh Cr, a 7.07% M-o-M growth against INR 1.89 Lakh Cr in November 2019.

The drop in the total value of transactions in November was seen as a temporary stabilisation, and the growth in December has only highlighted that. But in terms of other performance figures achieved by digital payments by NPCI for December, AePS had a hard time:

• Aadhar-enabled Point of Sale (AePS) stood at 190.66 Mn transactions, as against 196.81 Mn transactions in November 2019. This has been a continued fall over the last few months, with a fall in volume as well as value
• National Electronic Toll Collection (NETC) recorded 64.33 Mn transactions, a 84% M-o-M jump after mandatory FASTag implementation
• Immediate Payment Service (IMPS) clocked 256.47 Mn transactions worth INR 2.10 Lakh Cr

We had expected NETC numbers to rise exponentially in the December figures as FASTag electronic toll collection has been made compulsory on national highways from December 15, 2019. It is to be noted that AePS facilitates cashless transactions through biometric authentication, which has declined month on month.

Reports claimed that the M-o-M decline is because “many large public sector banks have introduced limits on the number of transactions their customers can do on other terminals.”

Further, in terms of UPI, Inc42 had recently noted that the share of UPI to all digital payments in India is falling year-on-year. If we examine the share of UPI in digital payments, the share of number of transactions has increased from 6.2% in FY18 to 22.89% in FY19. But at the same time, the share of UPI within digital payments in terms of value has seen a marginal fall.

In FY18, the share of value of UPI transactions was 0.8% of the total value of digital payments for the year. But in FY19, the share of value of UPI transactions was 0.5% of  the total value of digital payments for the year.

While in percentage terms, it looks like a small decline, but when we are comparing this to the large value of these transactions, it is a considerable Y-o-Y fall.

While it is safe to assume that this fall in value might be because of smaller ticket transactions today, UPI is also used at larger convenience stores and for larger online purchases such as ticketing and more.

With its Singapore launch, UPI has also forayed into international markets. The implementation of UPI in other countries is expected to solve problems faced by Indians travelling abroad due to currency conversion and the non-availability of credit or debit cards. After establishing UPI in Singapore, the NPCI is also planning to roll out the payments service in UAE and other countries.