UPI Continues To Shine In 2024, Transactions Cross 17,000 Cr Mark

The Unified Payments Interface (UPI), which has become synonymous with digital payments in the country, continued its upward march in 2024. Total UPI transactions surged almost 46% to a record 17,220 Cr in 2024 from 11,768 Cr in the previous year. 

Meanwhile, the total value of UPI transactions zoomed over 35% to INR 246.82 Lakh Cr from INR 182.84 Lakh Cr in 2023. Compared with the 2022 numbers, the total value of UPI transactions almost doubled from INR 125.94 Lakh Cr across 7,404.45 Cr transactions. 

The breakthrough month in 2024 was December, when UPI transactions reached a new monthly high of 1,673 Cr. This was an 8.08% increase from 1,548 Cr transactions in the preceding month. 

The momentous year for UPI came on the back of increasing popularity of fintech apps such as PhonePe, Paytm, CRED, among others, which have made UPI one of the most convenient modes of payment. 

The government’s continuous push to promote the real-time payment system in the country, as well as globally, also paved the wave for the surge in UPI transactions. Due to the National Payments Corporation of India’s (NPCI’s) efforts to increase the usage of UPI, the payment system has been introduced in a host of countries like Sri Lanka, Maldives, the UAE, among others. 

Moving forward, digital transactions are only expected to grow as the Centre and the Reserve Bank of India (RBI) continue to take measures to expand the scope of UPI. With that said, let’s delve into the performance of the top UPI players in the past year. 

Dominance Of PhonePe & Google Pay Continues 

As was the case over the previous years, Walmart-owned PhonePe continued to be the largest player in the UPI landscape with over 48% market share. It processed 7,479.4 Cr transactions worth INR 102.9 Lakh Cr between January 2024 and November 2024. This was an almost 50% increase from the 4,989.91 Cr UPI transactions it processed during the same period of 2023. 

It is pertinent to note that the app-wise data for the month of December is not out yet.

Meanwhile, Google Pay held on to its second spot with over 37% market share. It processed 5,786.2 Cr transactions worth INR 73.51 Lakh Cr from January 2024 till November 2024 as against 3,740.94 Cr UPI transactions worth INR 56.04 Lakh Cr in the year-ago period.

Paytm retained its third position but saw its market share nearly halve to 7.03% in 2024 from 14.1% in the previous year. The decline was a result of the RBI’s crackdown on the fintech startup’s subsidiary Paytm Payments Bank. 

After the RBI’s action, Paytm obtained a third-party application provider (TPAP) licence from the NPCI in March. Following this, Paytm began migrating its users to its partner banks. Further, the Vijay Shekhar Sharma-led company got the NPCI clearance to onboard new users only in October 2024. 

However, Paytm is expected to face intense competition as new contenders like Sachin Bansal-led Navi and Flipkart-backed super.money take on the might of giants in the Indian digital payments space. 

Meanwhile, the NPCI has once again deferred the implementation of its proposal to cap the market share of TPAPs at 30%. “Considering various factors, the timeline for compliance of existing TPAPs who are exceeding the volume cap is extended  by two years, i.e. till December 31, 2016,” the NPCI said in a circular.

The industry also welcomed the NPCI’s decision. Industry experts believe that it is a strategic move to ensure continuous growth and stability of the UPI ecosystem. 

“We welcome the extension of the market cap deadline of UPI apps by the NPCI as we strongly believe that the Indian people themselves will choose from dozens of new UPI apps available. Paytm is getting back to capture its lost market share, Navi, CRED, BHIM, WhatsApp Pay and so many new apps are growing strongly. Banks are also getting their UPI app strategy in place,” said Vishwas Patel, joint MD of Infibeam Avenues and chairman of the Payments Council of India (PCI).

Over the next two years, the market itself will resolve this market cap issue. Blocking growth of incumbents is not the right strategy and would have surely slowed the growth of UPI, Patel added.

Major UPI Moves In 2024

While 2023 saw the Indian government inking several pacts with various countries to boost UPI offerings and expand its product suite, the year 2024 saw many of these moves being implemented. 

The NPCI incorporated NPCI BHIM Services Ltd (NBSL), formerly known as BHIM, as a wholly-owned subsidiary. Additionally, the Reserve Bank Of India (RBI) also launched UPI Circle. 

Let’s take a look at the major UPI updates of 2024:

• UPI went live in several countries like Nepal, Qatar, Peru and Singapore. The NPCI signed MoUs with several international entities like UAE’s instant payments platform AANI and Network International to bolster its services. Additionally, it also signed an agreement with Maldives’ economic development and trade ministry to roll out UPI in the Indian Ocean archipelago.
• The NIPL, the NPCI’s international arm, partnered with the Bank of Namibia and the Central Reserve Bank of Peru (BCRP)  to develop a digital payments system like UPI for the African and South American nations respectively.
• The central bank collaborated with the Bank for International Settlements (BIS) and central banks from four ASEAN nations to launch Project Nexus. Under this initiative, UPI will be linked to fast payment systems (FPSs) of Malaysia, Philippines, Singapore, and Thailand.
• The NPCI launched ‘UPI One World’, eliminating the hassle of carrying cash for international tourists. It partnered with IDFC First Bank and Transcorp International Limited to develop this offering.
• The RBI permitted small finance banks (SFBs) to offer pre-sanctioned credit lines through UPI. The central bank also allowed prepaid payment instruments (PPIs) with full KYC to make UPI payments through third-party apps.
• The NPCI launched UPI Interoperable Cash Deposit (UPI-ICD) to enable customers to deposit cash at ATMs by using UPI.
• After the launch of UPI Lite Wallet last year, the RBI increased its limit to INR 5,000 from INR 2,000 previously. Along with this, the offline transaction limit for UPI Lite service was increased to INR 1,000 per transaction from INR 500 previously. It also decided to increase the transaction limit of UPI123 Pay to INR 10,000 from INR 5,000.
• The central bank increased the UPI transaction limit to INR 5 Lakh per transaction from the INR 1 Lakh previously for tax payment purposes.

What To Expect In 2025?

With the increasing number of partnerships, UPI is all set to further expand its reach to more countries this year. For instance, India and Ghana have been in talks to operationalise UPI on Ghana’s interbank payment and settlement systems (GHIPSS) in the next few months. 

On the product front, the NPCI is in talks with a host of startups to integrate biometric authentication, including fingerprint and face ID verification, in UPI offerings. In the coming years, such features will enable authorities to prevent UPI-related frauds in real time.

The central bank is also keeping a close eye on UPI-related frauds, and planning several initiatives to curb these. The RBI is looking to build a digital public infrastructure platform aimed at combating payment frauds. It is pertinent to note that India witnessed 6.32 Lakh cases of UPI payment frauds worth INR 485 Cr in the first six months of FY25.

[Edited By Vinaykumar Rai]