Where India spends: Gaming, utilities, e-com account for 80% of online transactions

Ecommerce, gaming, utilities, government and financial services accounted for nearly 80% of total online transactions in India during the second half of 2023, according to a  new report by French payment firm Worldline.

Also,  the most frequently visited In-Store merchant categories were grocery stores, restaurants, service stations, clothing stores, government services, pharmacies and hospitals which accounted for around 65% in terms of volume and nearly 50% of the total transaction value during July-December 2023 noted the report. 

The top 10 states and UTs with the highest number of transactions at physical touch points in 2023 were Maharashtra, Kerala, Tamil Nadu, Karnataka, Delhi, Telangana, Uttar Pradesh, Gujarat, Jharkhand and West Bengal.

The most popular categories for UPI person-to-merchant (P2M) transactions reveal why average transaction sizes are decreasing while overall volumes are rising.  These categories typically involve smaller purchases but happen very frequently. Here's the breakdown of the top 10 MCCs (Merchant Category Codes) for UPI P2M transactions:

1. Groceries & Supermarkets
2. Eating Places & Restaurants
3. Telecommunication Services (phone bills)
4. Fast Food Restaurants
5. Department Stores
6. Service Stations (gas stations)
7. Digital Goods: Games (in-app purchases)
8. Bakeries
9. Drug Stores & Pharmacies
10. Utility Bill Payments (electricity, gas, water)

This list reflects a shift towards using UPI for everyday necessities and smaller bills, contributing to the high transaction volume and lower average ticket size.

Mobile payments, which are transactions done using mobile phone apps, have seen solid growth. A significant number of these transactions are UPI-based but could be a whole host of payments using bank accounts etc. 

The volume of mobile transactions in H2 2023 was 62.95 billion compared to 45.58 billion in H2 2022, a 38% increase while the value of mobile transactions in H2 2023 was Rs 152.33 trillion compared to Rs 116 trillion in H2 2022, a 31% increase. 

The average amount spent per mobile payment transaction has decreased slightly. The average ticket size (ATS) in H2 2023 was Rs 2419.60, a 5% reduction compared to H2 2023. This shows that people are using mobile payments more often, for a wider variety of purchases. This trend suggests that mobile payments are becoming a reliable and preferred way to pay in India.