Digital India: The transaction value of UPI in December crosses Rs 2 lakh crore

Nagpur Updates January 4, 2020

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Since mid-2017, the first mover in UPI payments has lost share to rival apps introduced by major internet and e-commerce companies, many of whom are multinationals.

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Despite dipping slightly month-on-month in November, the number of transactions made using the Unified Payments Interface (UPI) channel reached Rs 2 lakh crore in December. In December, the UPI reported 1.3 billion Rs 2.02 lakh crore transactions, up from the previous month’s 1.22 billion Rs 1.89 lakh crore transactions.

According to data released by India’s National Payments Corporation (NPCI), its Bharat Interface for Money (BHIM) application has been used to make 17.82 million Rs 6,316.37 crore transactions. In other words, the app now contributes in terms of volume a mere 1.37 % to UPI use.

Since mid-2017, the first mover in UPI payments has lost share to competing apps introduced by major internet and e-commerce companies, many of whom are multinationals.

As of January 1, retailers will no longer be required to fork out Merchant Discount Rate (MDR) fees to accept UPI payments. The government’s change is aimed at forcing smaller retailers to follow more of the payment system.

Mandar Agashe, founder and vice president of Sarvatra Technologies, said: “This would make it easy for every retailer to start accepting payments through RuPay debit card and UPI and drive digital payments at merchant outlets to a large extent.” The government’s requirement that all companies with Rs 50 crore turnover or more accept payments through RuPay debit cards and UPI QR codes would increase adoption.

At the same time, some industry watchers say the recent decision to waive charges on transactions involving National Electronic Fund Transfer (NEFT) that eventually cannibalize UPI transactions. At least 70% of UPI volumes included peer-to-peer (P2P) transactions and the difference between UPI users and NEFT users could be significant.

In addition, on January 1, a two-year MDR subsidy offered by the government for merchant transactions up to Rs 2,000 expired. This, too, could cause some merchants to fall off the network earlier using UPI.