UPI Transactions Jump 4.4% MoM In May, Touch All-Time High at 18.68 Bn

The Unified Payments Interface (UPI) transaction count grew 4.4% to 18.68 Bn in May from 17.89 Bn in April, touching a fresh all-time high. On a year-on-year basis, the number of transactions rose 33%.

In April, UPI transactions had seen a 2.2% month-on-month (MoM) dip.

As per the data released by the National Payments Corporation Of India (NPCI), the UPI transactions in May accounted for INR 25.14 Lakh Cr, up 5% from INR 23.95 Lakh Cr in April.

The average daily transaction count rose to 602 Mn in the month under review as against 596 Mn in April. Besides, the average daily transaction amount stood at INR 81,106 Cr.

The UPI Duopoly 

While the NPCI is yet to release the app-wise data for the UPI players for the month of May, PhonePe and Google Pay are expected to continue to be the top two players, as they have been for years.

The two players together hold nearly 80% market share in the UPI ecosystem, followed by Paytm with about 7% stake for the last few months.

In April, PhonePe recorded 8.36 Bn transactions out of the total transaction count of 17.89 Bn. Google Pay recorded 6.48 Bn transactions worth INR 8.42 Lakh Cr.

Beyond the top three players, the competition is stiff. The likes of Navi, CRED, super.money, Amazon Pay, FamApp, among others, continue to move up and down on the leader board.

Notably, the NPCI has been planning to cap the market share of third party application providers (TPAPs) in the UPI ecosystem to 30% for the last few years. However, the proposal has been postponed multiple times, with the latest deadline shifted to December 31, 2026.

The MDR Debate 

While UPI continues to grow, there is a growing chorus from the industry to consider zero merchant discount rate (MDR) on these transactions.

Earlier this year, the Payment Councils of India (PCI) wrote to Prime Minister Narendra Modi to reconsider the zero MDR regime for UPI and RuPay transactions.

The MDR is the fee charged to merchants by banks or payment service providers for processing digital transactions through UPI. In 2020, the fee was brought down to zero to promote digital payments in the country. 

The PCI proposed charging 0.30% MDR of 0.30% for UPI only for large merchants. The proposal was also supported by the Startup Policy Forum (SPF). 

The payments industry has for long argued that they cannot monetise their services under the zero MDR regime, and this affects investments for upgrading infrastructure. However, the government is yet to take a final decision on the matter.

Meanwhile, Paytm founder and CEO Vijay Shekhar Sharma recently said that introduction of MDR on UPI payments may result in an increase in competition.