Unified Payments Interface (UPI) transaction value hit an all-time high in 2020. Due to the COVID-19 pandemic, the nationwide lockdown made many people turn to online transactions, which led to an increase of 105% in UPI transactions.
The recorded growth value of 105% in UPI transactions is from December 2019 to December 2020, which shows the penetration of online financial payments in the country. UPI, India’s digital payments system since its inception in 2016, has achieved various milestones and has now become the most preferred mode of payment in the nation.
UPI’s massive framework had even made Google write to the US Federal Reserve Board about the success of this National Payments Corporation of India (NPCI) owned online financial payment platform to build a faster digital payment service in the US.
UPI, a flagship example of Digital India, witnessed a total transaction value of Rs 2,02,520.76 crore by the end of December 2019. By the end of December 2020, the figure according to official statistics from NPCI was Rs 4,16,176.21. UPI transactions crossed the benchmark of Rs 3 lakh crore in September 2020 itself, and this was majorly due to the pandemic imposed lockdown. During the lockdown phase, people seemingly tried to avoid cash payments, which led to a jump in digital payments. The growth, which took 14 months pre-COVID, was achieved in 9 months (Feb-Oct) in 2020.
Experts have lauded the growth trajectory of UPI. It could corner a significant share of overall recharge & bill payments markets and P2P in the financial year 2018. During the financial year 2019, it clocked huge numbers – 700% growth in terms of value and 490% growth in volume.
The financial year 2020 also started on a good note, with UPI transaction volume breaking all previous records. The significant growth in FY 19 and FY 20 was driven mainly by the three third-party apps PhonePe, Google Pay, and Paytm while the government promoted BHIM and witnessed a flat growth curve.
In October 2020, UPI crossed the two-billion mark for the first time. With the low cost and ease of doing online financial transactions, UPI has seen an upward trend. However, amidst this growth, it has been witnessing tough competition from third-party apps such as Google Pay, Paytm, and PhonePe. The latest addition to this list has been WhatsApp pay. Experts believe that WhatsApp Pay may change the UPI ecosystem dynamics since it boasts of 400 million users in the country.
NPCI in November 2020 has changed in the policy regarding the third-party app providers; it has announced a cap of 30% on the third-party app providers’ total transaction volume on UPI. Dilip Asbe, NPCI chief, has even predicted that UPI would grow to 500 million in the next 3 years. Meanwhile, along with RBI, NPCI plans to set up a subsidiary to take this digital payment model to other countries.