After a few months of tepid volumes, the government-owned Unified Payments Platform (UPI) is back on growth trajectory. Both, volumes as well as the total value of transactions made over the digital payments interface have grown over the last three months, recording the highest-ever numbers last month.
In September, UPI recorded 955.02 million transactions worth Rs 1,61,456.56 crore. This is 4 per cent higher in terms of volume and 4.5 per cent more in terms of value over August, when the corresponding numbers stood at 918.35 million and Rs 1,54,504.89 crore respectively. The September numbers are highest-ever reported by the platform since UPI came into being in August 2016.
Data from National Payments Council of India (NPCI), which manages UPI, show that the numbers are steadily rising since June. This comes as a positive sign as the volumes had declined month on month between March and May.
The latest numbers may be seen as an indicator that consumer economic activity is keeping steady despite an overall slowdown in the economy. India’s GDP growth rate has fallen below 6 per cent. While consumer spending has dropped in the automobile sector, telecommunication industry’s debt is ballooning and Indian banks are batting against bad loans..
However, the trend may also mean that more and more transactions are happening digitally, instead of cash transitions, which do not conclusively point to the fact that consumption is rising.
In digital payments, a host of players are expanding the ecosystem and acceptance of mobile payments. Players like PhonePe, Google Pay, Paytm, and half a dozen others are offering incentives and cash-backs to consumers for paying through their apps.
Banks have also come forward to launch UPI over their own banking applications. Also, under the UPI 2.0 framework, people can now subscribe to initial public offerings (IPOs) through UPI, a feature that is now being rolled-out selectively and was used in the recent IPO of Affle.
A major push behind digital payments is by the government itself. In the 2019 Union Budget, the Center announced that certain businesses will not have to pay a digital payments charge called MDR (merchant discount rate) if they accept payment over digital means including UPI. This had led to a host of retailers and supermarket chains to market UPI and card payments at their cash counters.
According to reports, the government is also planning to incentivise the use of QR-codes (used for UPI payments) by offering merchants tax incentives.