Seven months into this fiscal year, India's UPI clocked 2 billion transactions. The gravity-defying growth comes into focus when you realise that the last 1 billion transactions occurred over just the last 2.5 months.
The Unified Payments Interface (UPI) is quickly turning into a remarkable success story when it comes to electronic payment infrastructure. Just seven months into the current financial year, over 2 billion transactions have taken place over UPI, transferring a total of Rs 3.42 lakh crore. The growth rate has been galloping, averaging around 30 percent month-on-month growth over July, August and September this year. It was sometime in August that UPI crossed the 1 billion-transactions mark, taking just under three months to double that number.
UPI got off to a slow start. In spite of demonetisation in November 2016 and Prime Minister Narendra Modi pushing the BHIM app (which runs on UPI) only 17.9 million transactions had been completed at the end of March 2017. The value of funds transferred during this period stood at Rs 6,900 crore.
However, things changed the following year when big private players, including Google Pay (then Tez), Paytm and others starting adopting UPI on their platforms. In FY 2018, the total number of transactions grew by almost 5,000 percent to almost 915 million from 17.9 million in FY 2017. The total value of transactions skyrocketed to Rs 1.09 lakh crore in FY18, which is almost a 1,500-percent increase.
The momentum continued this year. In July, Indian retail payments organisation National Payments Corporation of India (NPCI) released UPI 2.0, the much-awaited upgraded version of the service. The new version allowed merchants to link overdraft accounts and send invoices along with payment requests in the inbox. It also allowed users to set up a one-time mandate, essentially allowing users to block a certain amount in the customer’s account balance.
The NPCI has also taken multiple steps this year to curb repetitive or fraudulent transactions on the network. In a circular to banks, it stated that transactions, where the source and destination of the UPI payment is the same bank account, would be blocked starting August 1.
In July, the Central government discontinued the BHIM incentive scheme for merchants while making revisions to the BHIM cashback scheme for individuals and users. The incentives are to be paid only to new users of the BHIM app while earlier, incentives were given to users of BHIM and BHIM-UPI apps of different banks. Further, the maximum incentive cap was also revised downward. [Read more]
In October, it halved the number of P2P transactions allowed from a single bank account to 10 over 24 hours. The timestamp of the first transaction will be considered as the start time.
Also in July, YourStory broke the news that the UPI Steering Committee, was considering to add value and volume targets for ‘third-party app providers’. Third-party apps connected to it through multiple partner banks (PSP banks) need to at least reach a volume of 5 million transactions worth Rs 500 crore a month, and within 12 months of going live with the payment infrastructure.