UPI crossed the $1-trillion mark in transaction values for FY 2021-22 after the payments system crossed 5 billion transactions in a month for the first time in March. A look at the road to a trillion, and what next
UPI is expected to have played a key role in increasing the adoption of digital payments in the country. (File)
The Unified Payments Interface (UPI) crossed the $1-trillion mark in transaction values for the financial year 2021-22 after the payments system crossed 5 billion transactions in a month for the first time in March. This marks a major landmark for the flagship payments architecture which has gained significant momentum in adaptation in the last few years.
The coronavirus pandemic and growing digital adoption in the country has seen UPI being used by increasingly larger numbers of Indians. It is now close to Rs 9 lakh crore in monthly transaction values.
Road to a trillion
According to data released by the National Payments Corporation of India (NPCI), which operates UPI, 5.04 billion transactions were processed on the platform until March 29, amounting to Rs 8.88 lakh crore, which was a growth of over 7 per cent compared to February.
So far in FY22, UPI has processed more than 45 billion transactions, amounting to over Rs 83 lakh crore. In comparison, in FY21, it had processed a little over 22 billion transactions, amounting to Rs 41.03 lakh crore.
This means that in a year’s time, both the number and value of transactions on UPI almost doubled, and is evidence of the increase in popularity of the payments system.
UPI is expected to have played a key role in increasing the adoption of digital payments in the country. The Reserve Bank of India’s (RBI’s) digital payments index (DPI) for September 2021 stood at 304.06 compared to 270.59 in March 2021.
According to a Macquarie Securities report, UPI also commands a lion’s share in the volume of total retail payments made in the country. In FY22, around 60 per cent of the volume of India’s retail payments were done through UPI, according to the report.
However, UPI remains the preferred choice largely for low value transactions — according to NPCI’s assessment, about 50% of the transactions recorded on UPI are worth less than Rs 200 each.
What next for UPI
It is projected that in the next 3-5 years, UPI would be processing a billion transactions a day, and to enable that, a number of initiatives have been introduced. Chief among these is UPI’s AutoPay feature, which has already seen increased adoption owing to RBI’s disruptive guidelines on recurring mandates. According to industry experts, the AutoPay feature will be crucial to increasing daily transactions on the platform.
Since smaller value transactions form the bulk of the payments made on UPI, the NPCI has also launched an “on-device” wallet feature for UPI users — known as UPI Lite — for facilitating small ticket transactions.
The RBI has also announced UPI on feature phones without an Internet connection, which is expected to open up the payments system to more than 40 crore individuals who use such devices. This will expand digital financial inclusion and add to the number of transactions made on the platform.
Despite monthly transactions increasing significantly on UPI, the platform has not been immune to glitches and instances of failed transactions. According to NPCI data, in February alone, State Bank of India — the biggest in terms of UPI volumes — saw 31.68 million transactions fail because of technical reasons like unavailability of systems and network issues over a base of 1.24 billion transactions, which means a failure rate of over 2.5 per cent.
Of the total 4.83 billion transactions processed on UPI in February, 69.96 million were declined due to issues at the banks’ or NPCI’s end. In January this year, UPI saw an unscheduled downtime of 187 minutes, its highest ever.
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