Home / News / India /  UPI to witness massive growth over next 5 years, says report

New Delhi: Real-time payments system Unified Payments Interface (UPI) is expected grow phenomenally in the next five years, capturing more than 50% of the payments space.

Between 2021-22 and 2024-25, the role of cash in the payments space will be meagre, according to a Boston Consulting Group (BCG) presentation made at an industry event last week. UPI will dominate the payments space with 59% payments transactions, followed by mobile and internet-based payments, which will constitute a fifth of the total number of cash and non-cash transactions, it said.

In contrast, choices pertaining to the payments space during 2018-19 portrays a different picture, with ATM transactions being the highest, occupying close to a third of the total cash and non-cash transactions, followed by UPI-based digital payments with a 17% share, point of sale (PoS) machines (20%), and mobile and internet (13%), and cash comprising 5% of the total transactions.

Going forward, ATM transactions are expected to comprise 5% of total transactions between 2021-22 and 2024-25, the report said.

The change in the payments landscape is a result of innovation coupled with the government and the banking regulator’s attempt to move to a ‘less-cash economy’.

Last week, Reserve Bank of India (RBI) governor Shaktikanta Das said banks need to make the most of technological advances in the payments and lending space to compete with fintechs and bigtechs.

Global technology giants such as Alibaba, Amazon, Facebook, Google have grown massively over the last 15-20 years, with some of them now offering payment services that are an alternative to card-based payments. Similarly, several fintech startups have mushroomed over the last few years to offer lending and other banking-related services to customers that are widely believed to give competition to lenders and give them a run for their money if they do not catch up.

Sample this, the three-year old real-time payments system UPI clocked 822.29 million transactions worth 1.46 lakh crore in July. There were 754.54 million transactions in June, giving stiff competition to the number of debit card-based transactions at ATMs, which totalled 786.11 million in June. Debit card transactions--at PoS terminals and ATMs-- presently, dominate the payments space.

Of the total number of UPI-based transactions in 2018-19, GooglePay scored the maximum transactions at 36%, followed by Flipkart-backed PhonePe at 29%, Paytm at 25%, and other banks and payments instruments at 10%, the report said.

The benefits of the coming together of new-age technology and traditional banking methodology will be a win-win situation for the financial ecosystem and offer more options to the customer.

Recently, the Nandan Nilekani-headed panel on digital payments suggested increasing the volume of digital payments by 10 times in the next three years, along with initiatives such as removing transaction charges on digital payments, simplifying Know Your Customer (KYC) processes, and reducing KYC costs for banks. The regulator has taken initiated action based on the committee’s recommendations.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout