It has been five years since demonetization, and its contribution in making India a global leader in the digital economy is applaudable. In the last five years, millions of Jan Dhan accounts have been opened, and the people at the bottom of the pyramid are using digital payments. However, 2021 witnessed an even more dramatic rise in UPI transactions, making India a giant on the grounds of digital payments.
Record-breaking UPI transactions in 2021
The record-breaking Unified Payments Interface (UPI) transactions in 2021 both in volume and value terms have added a fur in India’s cap, making it a global e-payments leader. According to data released by the National Payments Corporation of India (NPCI), in December, 4.56 billion UPI transactions worth Rs 8.27 trillion have been recorded.
UPI transactions bounced back in December, with a volume of 9.09 per cent on month–on– month (MoM) basis and value at 7.60 per cent. On a year–on–year (YoY) basis, the volume of transactions has become twice of what it was while the value of transactions reported 99 per cent growth.
Read more: 5 years of demonetisation and 5 years of India’s ever-growing digital economy
Though November witnessed a marginal dip, UPI transactions in October likewise December, had reported record high transactions of 4.21 billion, worth Rs 7.71 trillion.
National Payments Corporation of India’s (NPCI’s) Chief Executive Officer Dilip Asbe had asserted, “In the calendar year 2021, UPI has processed more than 38 billion transactions, amounting to Rs 73.36 trillion. And, in the fiscal year so far (FY22), it has processed more than 31 billion transactions, surpassing the transactions processed in 2020-21 (FY21). In FY21, the platform processed around 22 billion transactions. The goal is to touch 40-42 billion transactions in the current fiscal year (2021-22).”
What is Unified Payments Interface (UPI)?
UPI has been welcomed ever since it was launched in 2016. It was frequently used especially after the Covid-19 outbreak and thus crossed 1 billion transactions for the first time in October 2019. In October 2020, another history was made when UPI processed more than 2 billion transactions for the first time. Further, it took only 10 months to become to 3 billion from 2 billion transactions that vindicated the popularity of UPI among the users. Well, the journey did not stop here. The payments platform, in just 3 months, reached 4 billion transactions. And, for three consecutive months (October, November, and December) 4 billion transactions were recorded.
Read more: Digital India success story: UPI transactions register phenomenal growth
According to a report by Jeffries, “In FY22, UPI accounts for 50 per cent of retail digital payments in the country and is almost 4.5x of debit and credit card transactions.” The report suggested that “digital payments are annualizing at $2 trillion in India, with UPI being the largest driver, followed by cards and mobile wallets.”
Read more: With 535,00,00,000 transactions in FY19, UPI comprehensively beats Debit cards in India
Experts have suggested that UPI’s next phase of growth will likely be through the AutoPay feature, which allows recurring payments of up to Rs 5,000. Recently, RBI has told that the small value transactions on the UPI platform will be done through an “on-device” wallet in UPI applications. The move will ensure lesser stress on the banking system making the transaction process even more simpler.
Not just Unified Payments Interface, another payment platform, Immediate Payments Service — an instant payment inter-bank electronic funds transfer system — also recorded 442.98 million transactions in December. These transactions reportedly amounted to Rs 3.96 trillion, up 7.52 per cent in volume terms and 8.8 per cent in value terms on a MoM basis. Its last record transactions came in October when it processed 430.67 million transactions, worth Rs 3.7 trillion.