Year ender 2023: UPI transactions rose 147% in 5 years. A look at new features announced this year

UPI transactions in 2023: India has witnessed an exceptional surge in Unified Payments Interface (UPI) transactions in 2023. In FY2022-23, 8,375 crore transactions were reported up from 92 crore transactions in FY 2017-18, showcasing a compound annual growth rate (CAGR) of 147% in terms of volume. UPI has emerged as a significant player in India’s digital payment sector, contributing to 62% of digital payment transactions in FY 2022-23.

UPI-based transactions touched a total value of Rs 17.4 lakh crore in December 2023, RBI recently said in its monthly bulletin.

The value of UPI transactions has seen a considerable rise, from Rs 1 lakh crore in FY 2017-18 to Rs 139 lakh crore in FY 2022-23, marking a CAGR of 168%. The data underscores the growing acceptance and usage of UPI in the country.

The government and the Reserve Bank of India (RBI) are making strategic efforts to boost digital transactions and financial inclusion, resulting in significant growth. These initiatives include incentive schemes for RuPay Debit cards and small-value BHIM UPI transactions. They have also provided advisories to improve payment acceptance infrastructure and assigned digital payment targets to banks.

UPI transactions soared by 46 per cent year-on-year (YoY) in November, in comparison debit card transactions declined by 6.6 per cent YoY in October.

In value terms, the disparity is even more apparent, with UPI transactions settling at Rs 17 lakh in November. Debit card transactions, on the other hand, are just a third of the amount settled through UPI during the month.

UPI transactions at semi-urban and rural retail stores surged 118 per cent in terms of volume and 106 per cent in value terms, reflecting growing adoption of UPI beyond tier-II regions, a recent report by PayNearby stated.

The report noted that mPOS (Mobile point-of-sale) acceptance witnessed a growth of 5 per cent in value, emphasising increasing adoption of cutting-edge technology among small merchants.

“The payments ecosystem witnessed major milestones in the year 2023, which further strengthened India’s position as the global leader. From showcasing its UPI prowess at G20 events and making UPI QR codes universally accepted at stores in countries like Singapore, and France, to the introduction of conversational payments, India is effectively balancing global expansion and inclusivity through payments,” said Mandar Agashe, Founder & MD, Sarvatra Technologies.

“Going ahead, we look forward to increased collaboration and participation from industry stakeholders and the regulators to take this payments revolution to the next level,” Agashe added.

Some prominent highlights in the UPI system in 2023

> The RBI raised the UPI payment limits for hospitals and educational institutions from Rs 1 lakh to Rs 5 lakh per transaction. The announcement was made by Governor Shaktikanta Das while unveiling the December bi-monthly monetary policy.
The payments can be through UPI via payment apps like Paytm, Google Pay, PhonePe as well as similar services provided by the banks.

> In 2023, the Central bank introduced the ‘instant credit via UPI’ feature. This feature enables individuals to access pre-approved credit lines from their respective banks through UPI. By linking their UPI accounts to scheduled commercial banks, users can avail the credit facilities quickly and without hassle.

“At 115 billion payments of financial flows worth Rs 180 lakh crores, UPI has grown significantly in 2023, strengthening its position as the most popular payment method with in-roads into key international corridor markets. Users have taken to new benefits of UPI in a significant way, notably being able to link and use RuPay credit cards and making AutoPay,” said Praveena Rai, Co-Chairperson of the Payments Council of India, COO, NPCI.

> UPI Lite X is designed to bring digital payments to even the most remote locations. UPI Lite X would allow users to send and receive money through UPI without an internet connection.

> UPI members can go live with UPI’s ‘Tap & Pay’ feature by January 31 next year, the National Payments Corporation of India (NPCI) said. UPI Tap & Pay introduced near-field communication (NFC)-based payments. NPCI described the facility as a ‘novel way to make your UPI transactions, keeping things easy, safe, and instant.’ It can be accessed only on phones or devices that have NFC capability.

To make the payment, one must look for the ‘Tap & Pay’ button on their UPI app. The transaction will be completed by tapping the device on the UPI Smart Tag/Smart QR.

> Under Hello! UPI, users can make voice-enabled UPI payments. The feature allows transactions via apps, telecom calls, and IoT devices in both Hindi and English. Conversational Payments on UPI and BillPay Connect are part of Hello! UPI. It will be available in different languages.

The NPCI has partnered with the Bhashini programme, AI4Bharat at IIT Madras, to co-develop Hindi and English payment language models.

> Bharat BillPay Connect: This is an initiative aimed at effortless bill payments through conversations. ‘Bharat BillPay Connect’ enables users to pay their bills through natural conversations with popular voice assistants like Alexa or via feature phones, smartphones, or merchant soundboxes.

“In the anticipated trend of 2024, the surge in mobile payments is driven by the escalating value of digital wallet transactions. CheqUPI has played a pivotal role in this landscape by introducing India’s first digital UPI wallet for foreigners and NRIs, allowing them to make payments seamlessly from any corner of the country using just their smartphones. This growth is further propelled by the increasing popularity of buy now, pay later (BNPL) options, microloans, and personalized investment opportunities,” said Manish Kumar Shukla, Co-founder, CheqUPI.

“The recent PA licenses released by RBI will be a big game changer for the Indian fintech sector – ushering in more innovation and opportunities for businesses to access the best digital payment solutions. The introduction of multiple industry-first efforts like – credit on UPI, Conversation Payments in UPI, UPI Lite in 2023 is also a strong indicator of how fintech players are making this ecosystem inclusive, adaptable and robust for both consumers and businesses. Looking ahead, 2024 will be a year where we will see an increased focus on building products that continue to be relevant for customers and the financial ecosystem,” said Akash Sinha, CEO & Co-Founder, Cashfree Payments.

Also read: Pilot phase of ‘UPI for secondary market’ to begin Jan 1; CRED’s Kunal Shah says ‘big moment for India’

Also read: Google Pay, PhonePe, Paytm, BHIM users alert! NPCI to start deactivating these accounts from December 31

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