ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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The Adoption of Unified Payments Interface in India

Trends and Implications

This article examines the trend, pattern and rate of adoption of the Unified Payments Interface transactions in India. For estimating the results, the study utilises the generalised modified exponential function, which allows for more flexible S-shaped curves. Based on data from the Nation­al Payments Corporation of India, the number of UPI transactions is likely to increase more than sixfold in a span of five years’ period. The predicted rapid growth in UPI transactions has significant implications for the payments app developers, internet service providers, the NPCI, and the UPI regulator—the Reserve Bank of India.

India is experiencing a digital payment revolution led by the Unified Payments Interface (UPI) platform. The UPI, an instant real-time payment system regulated by the Reserve Bank of India (RBI) and developed by the National Payments Corporation of India (NPCI), is becoming one of the best financial inn­ovations in India since indepen­dence, and on the verge of replacing the country’s cash economy. The UPI was laun­ched in 2016 with an objective to promote digital transactions and paving the way for a cashless economy so that the fight against black money and corruption can be strengthened. It allows imme­diate transaction from one bank account to another through a smartphone application (such as BHIM, Google Pay, Paytm, PhonePe, UPI, etc). The transaction can take place through scanning of quick response (QR) codes, registered phone number, or even through the Indian ­Financial System Code (IFSC) details. UPI applications are also used to pay home bills, transit charges, and to avail financial services like loan payments and credit card bills.

The UPI users do not need to carry cash or card for any exchange, just a smartphone is enough to make any kind of transaction up to `1 lakh per day. Moreover, unlike credit cards, UPI payments are free of cost; there is no extra charge for doing a UPI payment. One can transfer just `1 without paying any transaction fee. Hence, UPI peer-to-merchant (P2M) transactions have significantly taken over the share of card and other payment modes. In 2021, the volume of credit cards was 2.15 billion transactions, for a value at `8.88 trillion, while the volume of debit cards was 4.12 billion transactions, for a value of worth `7.42 trillion. In January 2022, the share of credit cards was under 2%, compared to 18% of UPI in retail digital payments (it used to be below 9% in 2020).

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Updated On : 28th Nov, 2022
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