Statsguru: From UPI to IMPS, mapping digital transactions in India

Last week, the Reserve Bank of India announced a new service for feature phones, allowing over 400 million people to use Unified Payments Interface (UPI) seamlessly. 

The new feature is the third iteration of the unstructured supplementary service data (USSD) service launched in 2016. It is expected that the new feature will onboard more users and help UPI cross the Rs 10-trillion monthly mark (chart 1). 

The need for the new service arose because despite transaction volume for digital payments growing, transactions from USSD service were declining. In February, Rs 0.14 billion worth of transactions were done using the USSD service, which is way lower than Rs 0.21 trillion in value achieved in January 2019 (chart 2). 

The growth in immediate payment service (IMPS), another National Payments Corporation of India payment service, was faster than national electronic funds transfer (NEFT). IMPS transactions’ growth in value averaged 2.48 per cent, compared to 1.01 per cent for NEFT, indicating the growing acceptance for faster money transfer (chart 3). 


 

Transaction volumes grew even faster than the value. Credit card usage at online channels was higher, but while debit card usage at point-of-sale (PoS) devices increased again, its share of online transactions declined.

In November 2019, 52.3 per cent of transactions carried out on credit cards were at PoS terminals; the ratio has declined to 37.3 per cent. On the other hand, debit card usage at PoS terminals stood at 62.1 per cent in January 2022 (chart 4). 

Wallets have also made a comeback, with rising transaction volumes. Wallet transactions were consistently above Rs 200 crore between October and December (chart 5). 

Even though digital usage is growing in absolute terms, a Business Standard analysis shows that digital transactions have declined as a ratio of gross domestic product. In 2018-19, the ratio was 8.7; in 2019-20, it dropped to 8.1. In 2021-22, it is expected to fall further to 7.1 (chart 6).
StatsGuru is a weekly feature. Every Monday, Business Standard guides you through the numbers you need to know to make sense of the headlines