National Payments Corporation of India (NPCI) has reported 2.64 Bn payments over the unified payments interface (UPI) in April 2021, representing a 3% decrease in volume from 2.73 Bn transactions reported in March. The transaction value of UPI payments has also decreased 2%, from INR 5.04 Lakh Cr reported to INR 4.93 Cr in the same time period.
The rising Covid cases in India may be one of the major reasons behind this dip, as many states have resorted to lockdowns, curfews and other restrictions to keep the situation in control. UPI transactions had noticed their first dip in April 2020, after the central government had imposed a nationwide lockdown during the first wave of Covid-19.
UPI transaction had dipped below the billion dollar mark in April 2020 to 990 Mn transactions. Meanwhile the transaction value had dropped to INR 1.51 Lakh Cr as all major services including traveling, dining out, ecommerce or offline transactions were shut.
According to a digital payments tracker by Motilal Oswal Financial Services Limited (MOFSL), which analyses digital transactions between FY2020 and till February 2021 (FY2021), UPI currently controls 73% market share of all digital transactions volume in India. But the report had predicted a decline in transaction value and volume with the rising number of Covid-19 cases.
It noted that rising cases would lead to lower discretionary spending in the travel, tourism and entertainment segment. “Rising share of ecommerce transactions and a gradual recovery in other segments would enable spends to grow at a modest pace in the medium term,” the report read.
UPI payments have grown 93% year-on-year to over INR 41 Lakh Cr in the past year. Notably, UPI processed transactions worth INR 4.25 Lakh Cr in February 2021, almost doubling from INR 2.22 Lakh Cr in February last year. The UPI transaction volume also grew from 1.32 Bn to 2.2 Bn in the same time frame. Over the past three years, the average ticket size of UPI increased 58% to INR 1,800-INR 1,900 in FY21, from INR 1,200 of FY18.