The growing popularity of UPI can be attributed to its simple, safe, cost-effective and mobile-based payment system. Companies such as Paytm, PhonePe, MobiKwik and GooglePay, along with 144 banks, also offer payments via UPI, which surpassed mobile wallet payments in terms of volume of transactions as well as value. There were 384.89 million mobile wallet transactions worth ₹15,990 crore in March, compared to 799.54 million UPI transactions worth ₹1.33 trillion during the same month. As their awareness and comfort increase, people are moving towards UPI to carry out high-value transactions.
What are its advantages?
UPI lets a user transfer money across multiple bank accounts in real time, without revealing details of a beneficiary’s bank account. Money can be immediately sent via one’s mobile phone at any time, regardless of a bank’s working hours. Most modes of bank-dependent digital payments are limited by the time of day and holidays. All one needs for UPI is a robust internet connection, a smartphone and a UPI ID to send funds with a cumulative value of ₹2 lakh a day or 10 transactions worth that amount. It has been adopted as a payment mode by e-commerce sites, cab aggregators and food ordering apps.
How fast is it gaining popularity?
In April, 781.79 million transactions worth ₹1.42 trillion were made through UPI. This is a significant jump from the 93,000 transactions when it went live in August 2016.
UPI transactions have surged over four times in the last one year. But it has greater potential. UPI’s use has mostly been restricted to urban India and smartphone users, as it depends on an internet connection. Internet penetration in India has to expand and digital payments have to be popularized. UPI has been a driver of digital payments, which also comprise payments through debit and credit cards, e-wallets and e-payments. The banking regulator said there was a need to innovate payment services for feature phones.
How is the banking regulator giving UPI and e-payments a push?
The banking regulator recently announced its vision for payments in India for the period 2019-2021, which will enable the setting up of safe, secure, accessible and affordable payment systems. The idea is to move towards a less-cash society by providing more payment options to people, who have been untouched by such systems. The regulator expects the number of digital transactions to more than quadruple from 20.69 billion in December 2018 to 87.07 billion in December 2021.