UPI now preferred for micro-transactions

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UPI is increasingly becoming the most preferred payment mode for Indians. A recent Worldline report noted that the volume of UPI transactions skyrocketed from just 151 million in January 2018 to a massive 9.3 billion in June, 2023. P2M, or person-to- merchant transactions have also caught momentum within a year, making up for 57.5% of all UPI transactions as of June 2023. In January 2022, such P2M transactions only constituted about 40.3% of the total volume of UPI transactions. 

P2M transactions have significantly trumped P2P, or person-to-person transactions. The first half of 2022 saw 18.62 billion P2P transactions, which jumped 22% to touch 22.75 billion in the first half of 2023. During the same period, the volume of P2M transactions burgeoned from 13.33 billion to 29.15 billion. The value P2M transactions also saw a steep rise of 72%, jumping from Rs 11.6 trillion to Rs 19.18 trillion. 

This strongly indicates wider acceptance and penetration of UPI both amongst merchants and also common man. Moreover, the average ticket size i.e. the average amount paid per UPI transaction has also come down from Rs 885 in January 2022 to Rs 653 in June, 2023. Clearly, people are increasingly choosing UPI over other modes such as cash for making even micro-sized, regular payments. In terms of application preferred, PhonePe, Google Pay and Paytm dominated the market, facilitating 95.68% of all transaction volume. 

UPI transactions on physical touchpoints like in a merchants store accounted for nearly 65% of UPIs total transaction frequency, and 50% of transaction value. Majorly, these merchants included restaurants, pharmacies, clothing stores, restaurants, grocery stories and more. Maharashtra, Kerala, Tamil Nadu, Karnataka and Delhi were amongst the top states which recorded UPI transactions at such physical touchpoints. 

Between June 2022 and June 2023, UPI QRs registered an impressive growth of 79% in their overall base, touching 272 million. During the same period PoS terminals grew by 44% to reach 8.09 million, reflective of the rapidly developing payment infrastructure in India. 

Credit Cards spends on the rise 

In the wake of the imminent festive season, credit card spends are also touching sky-high levels. As per RBI data, expenditure via credit cards, which touched Rs 1.5 lakh crore in August, jumped 32.2% on a y-o-y basis, while also inching up 2.7% since July. The data also highlighted that there were 9,12,78,257 credit cards and 97,80,56,921 debit cards outstanding in the economy as of August 2023. Indians spent Rs 95,64,10,336 crores via credit cards last month online, while spending 17,83,91,388 crores via debit cards during the same period. Consequently, the volume of credit card swipes to transact online (13,84,97,498) far exceeded their debit counterparts (5,78,65,140)