8193 Cr transactions recorded in FY22, compared to 5554 Cr last financial year 2020-21
INR 81 Lakhs Cr worth of UPI payments recorded in FY22 till March 20, 2022
BHIM-UPI emerged as the preferred mode of digital payments in FY22, logging in a record of 452.75 Cr transactions with the total value of INR 8.27 Lakh Cr
Digital payments continue to witness a major upswing in the country as more and more people embrace online modes of payment.
Data by the government reveals that a record 8,193 Cr digital payments transactions were made in the current financial year, till March 20, 2022. In contrast, 5,554 Cr transactions were recorded during the financial year 2020-21.
The numbers have grown steadily since the launch of UPI service back in 2016. In FY19, 2,071 Cr transactions were recorded, followed by 3,134 Cr payments processed in FY20 and finally, reaching the 4,572 Cr mark in FY21.
Perusal of data also reveals that INR 9 Lakhs Cr worth of UPI payments were made in FY20, followed by INR 21 Lakhs Cr in FY21. The number nearly doubled to INR 41 Lakh Cr last financial quarter. This year (FY22 till March 20), the value of UPI transactions soared to a record high of INR 81 Lakhs Cr, representing the biggest spike in numbers since its inception.
Notably, state-backed BHIM-UPI has emerged as the preferred payment mode of payment this financial year logging in a record of 452.75 Cr transactions with the total value of INR 8.27 Lakh Cr till 28th February 2022.
Govt’s Bid To Spur Growth
The Centre has taken a slew of steps to incentivise the burgeoning industry. In December last year, MeitY announced an incentive scheme to promote the usage of RuPay debit cards and low-value BHIM transactions. Under the scheme, the government incentivises the banks by paying a percentage of the value of transactions through RuPay and BHIM-UPI (upto INR 2,000).
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Add to that, MeitY has also issued advisories to all central Ministries and state governments to improve online infrastructure to streamline digital payments.
The Ministry also launched ‘Pradhan Mantri Gramin Digital Saksharta Abhiyan’ back in 2017 to ramp digital literacy in rural India and also to raise awareness about digital payments in the hinterlands.
Notably, UPI enabled 39 Bn financial transactions last year amounting to business worth $940 Bn. This came to around 31% of India’s gross domestic product.
While digital payments are currently only available through smartphones and websites, NPCI is also planning to add feature phone support for UPI, which could be more critical to its growth story as well as financial inclusion goals.
What’s Behind The Spurt?
The adoption of online payments has mostly been fueled by pandemic-growth. Aversion to cash, caused by a general belief that they were carriers of coronavirus, led to online payments boom. Ease and simplicity of these platforms have also contributed in a big way to the success of digital payments.
It has not helped that the Indian government is currently locked in a tussle with payments giants MasterCard and Visa. In November last year, Visa had taken a dig at the Indian government, accusing it of favouring the state-backed RuPay. MasterCard too had complained to the U.S government back in 2018 regarding such concerns.
The Centre has made no qualms about backing the homegrown RuPay as a competitor to the US companies. This has only intensified the competition and the renewed interest by Centre has only led to more business for the state-backed companies.
Overall, the outlook seems positive for the digital payments ecosystem in the country. The sharp growth is a testament to the general public wholeheartedly embracing the new technology. But, stagnation seems to have creeped in but questions remain as to how far it will sustain the momentum.