After almost 12 months of continuous growth, the government’s unified payments interface (UPI) has seen a 6% decline in transactions in March 2020. The National Payments Corporation of India (NPCI) in an update said that UPI recorded 1.25 Bn transactions in March, against 1.33 Bn in February 2020.
The value of transactions also fell reaching INR 2.06 Lakh Cr in March, against INR 2.22 Lakh Cr in February 2020.
The fall can be seen in the light of the coronavirus outbreak in the country, which has gained prominence in March. Further, the restrictions were put in place for travel in the first half of the month, and later, the government announced countrywide lockdown.
The restrictions and lack of daily movement can be seen as the reason for this decline as the daily transactions would have reduced. The number of UPI transactions may take a major hit in April 2020 considering the lockdown effects and the new rules of P2P charges.
After availing the 20 free transactions, users will have to pay INR 2.5 for transactions under or equal to INR 1000, and INR 5 for transactions above INR 1000. Additionally, 18% of goods and services tax (GST) will also be charged on these transactions. The P2P UPI charges will come into play from April 1, 2020.
The charges will help banks earn more revenue by facilitating UPI transactions on their banking platform either through their own app or through third-party platforms such as Paytm, PhonePe, Google Pay, BharatPe, Amazon Pay among others. At present, neither banks nor platforms charge users for UPI transactions in a bid to keep demand high.
Further, for March 2020, here’s how other digital payment methods performed:
- Aadhaar-enabled Point of Sale (AePS) stood at 181.81 Mn transactions worth INR 10,170.31 Cr
- National Electronic Toll Collection (NETC) recorded 84.55 Mn transactions worth INR 1421.01 Cr
- Immediate Payment Service (IMPS) clocked 216.82 Mn transactions worth INR 2.01 Lakh Cr
Clearly, the lockdown has had a major impact on the online payments due to reduced demand for external goods, except essentials.
As lockdown continues to run till April 14, with speculation of it being extended considering the jump in positive cases, how UPI payments survive this period remains to be seen.