The unified payments interface (UPI) has continued its fast-paced growth once again with 1.61 Bn transactions in August 2020. This amounts to transactions worth nearly INR 2.98 Lakh Cr.
Digital payments body National Payments Corporation of India (NPCI) had previously announced that UPI had crossed 1.3 Bn transactions worth INR 2.16 Lakh Cr in January 2020. Later, it jumped to 1.32 Bn transactions worth INR 2.22 Lakh Cr in February. There was a minor slump in UPI transactions in March and April, which pulled transactions below the billion mark.
Yet UPI has managed to regain its growth pace and will manage to cross nearly 2 Bn transactions by the end of the year. Last month, it completed 1.49 Bn transactions worth INR 2.90 Lakh Cr.
BHIM UPI has been pivotal in pushing the boundaries of digital payment acceptance in India by penetrating the ground level users with safe P2P and P2M fund transfers. #BHIMUPI #DigitalPayments @dilipasbe @pnbindia @HDFC_Bank @TheOfficialSBI pic.twitter.com/Y90WtXhttc
— India Be Safe. India Pay Digital. (@NPCI_NPCI) September 1, 2020
Last year, a report titled ‘India Digital Payments Report 2019’ pointed out that UPI remained the most preferred mode of payment in terms of volume followed by debit cards, immediate payment services (IMPS) and credit cards. The report highlighted that growth in 2019 was majorly fueled by person-to-person (P2P) transactions than person-to-merchants (P2M) transactions.
While P2P transactions are expected to improve in the future as well, banks were looking to charge customers a commission on these transactions. The official website of ICICI Bank, Axis Bank and Kotak Bank highlighted that they will charge a user INR 5 for transactions above INR 1,000. Meanwhile, HDFC Bank said it will charge INR 2.75 for transactions up to INR 1,000 and INR 4.75 for transactions above INR 1,000. All these charges will be applicable on transactions beyond 20.
However, the Central Board of Direct Taxes (CBDT) issued a circular on August 30, 2020, highlighting that banks would face penal action if they levy any transaction charge on digital payment modes such as UPI that have been identified by the government to boost the digital financial services economy.
“Banks are, therefore, advised to immediately refund the charges collected, if any, on or after 1st January, 2020 on transactions carried out using the electronic modes,” the circular from the central tax authority read.
What’s Happening Beyond UPI?
- NETC FASTag registered 96.83 Mn transactions worth INR 1,712 Cr in August 2020, compared to 86.62 Mn transactions worth INR 1,623 Cr in July 2020.
- IMPS recorded 246.12 Mn transactions worth INR 2.35 Lakh Cr in August 2020, as against 222.10 Mn transactions worth INR 2.25 Lakh Cr in July 2020.