India’s digital payment landscape has witnessed a significant shift over the last few years with the introduction of the Unified Payments Interface (UPI). UPI is a real-time payment mechanism run by the National Payments Corporation of India (NPCI) that enables users to transfer money instantly through their mobile devices. In August 2021, UPI crossed the 10 billion transactions milestone, making it the most popular digital payment method in the country.
UPI Growth Over Two Years
According to data from NPCI, UPI recorded 6.5 billion transactions in August last year and 3.5 billion in August 2019. This growth is astonishing, and this payment method has grown almost three times in two years. In August 2021, 10.5 billion transactions were recorded on the platform, up from 9.9 billion in July 2021. In terms of the value of funds settled, UPI recorded Rs 15.7 lakh crore in August, slightly higher than the Rs 15.3 lakh crore figure for July.
Factors Driving UPI Growth
Both merchant transactions and peer-to-peer transactions have grown on the UPI network, indicating its widespread adoption by consumers. This increase in the number of UPI transactions can be attributed to several factors. Firstly, the increasing penetration of smartphones and the availability of cheap internet data have made it easier for users to access digital payments. Secondly, the introduction of UPI 2.0 and the adoption of new features such as UPI Mandate and UPI QR Code have added to the capabilities of the platform. Finally, the COVID-19 pandemic has accelerated the adoption of digital payments as people are increasingly avoiding cash transactions to limit person-to-person contact.
The Future of Digital Payments in India
UPI has made a significant impact on India’s digital payment landscape. Its rapid growth over the past two years points towards the increasing acceptance and adoption of digital payment systems in the country. UPI’s success has also inspired the launch of similar platforms such as RuPay, BHIM, and FASTag. This growth is expected to continue in the future as more people embrace digital transactions and the Indian government continues to promote the digital economy.
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