Mapping India's digital transactions: Cashless, but still card dependent

UPI transactions grew faster than credit or debit card transactions, but growth in average transaction size was still considerably lower than debit and credit card usage

In November 2016, when the government announced demonetisation, one of the objectives was to transition the country to a cashless economy. In the absence of many cashless alternatives, people graduated towards wallets. In December 2016, however, the government launched the unified payments interface (UPI), which linked bank accounts directly with digital transactions.

UPI transactions have since zoomed. In the first year, UPI registered an over 1000 per cent growth, albeit over a small base, and has grown in triple digits since. A Business Standard analysis found that the trend of triple-digit growth has continued. Between January 2022 and January 2021, the average growth in UPI transactions was over 100 per cent, both in value and volume terms. Other digital payments registered a below 50 per cent increase (see chart 1).

Compared to last year, debit card volumes and value transactions declined in January 2022 over the previous January. But despite this differential in growth, the ticket size or average value per transaction has remained muted for UPI. The growth in average ticket size was 8.7 per cent in January, compared to two years ago. The average ticket size of a UPI transaction in January 2020 was Rs 1,657; while this increased to Rs 1,940 in July 2020, it fell again to Rs 1,873 in January 2021. It further declined to Rs 1,802 in January 2022.

The value per transaction remained below the Rs 2,000 level throughout this period (see chart 2).

In contrast, the average ticket size of credit card transactions increased 35.8 per cent in January 2022 compared to January 2020. The two-year growth of non-point of sale (PoS) transactions was even higher at 50 per cent. The average value per transaction for non-PoS modes (e-commerce) was Rs 3,670 in January 2020 and rose to Rs 4,318.2 in January 2021 and further increased to Rs 5,517.6 in January 2022 (see chart 3).

The volume of debit card transactions was lower in value than UPI transactions for the last two years, but in January 2022, it was 4 per cent higher than the UPI ticket size. Debit card transactions at both PoS and non-PoS modes rose 34.6 per cent in two years.

Like credit cards, non-PoS transactions grew faster. The non-PoS debit card average ticket size increased 43.2 per cent between January 2020 and January 2022 (see chart 4).

On the other hand, the average ticket size of wallets rose just 7.9 per cent during this period. From Rs 397.5 per transaction, the average ticket size went down to Rs 388. However, over the last year, the average ticket size for wallets increased to Rs 428.9.