It is now well established that UPI (Unified Payment Interface), which kicked off in 2016, has been the prime-mover behind India's digital economy. And with each passing day, the numbers it throws up are staggering.
In Q1 2022, UPI clocked over 14.55 billion transactions in volume and Rs 26.19 lakh crore in terms of value. Its transactions volume and value has almost doubled since last year recording about 99% increase in volume and over 90% increase in value compared to Q1 2021.
These numbers emerged in a report from Worldline titled ‘India Digital Payments Report’ Q1 2022. It has analysed the transactions available in public databases as well as transactions processed by them in the first quarter (January – March 2022).
UPI P2M transactions emerged as the most preferred payment mode among consumers with a market share of 64% in volume and 50% in terms of value.
In all, Q1 2022, 9.36 billion transactions amounting to Rs 10.25 lakh crore were processed through payment modes like debit and credit cards, prepaid payment instruments like mobile wallets and prepaid cards, and UPI P2M (Person to Merchant).
The top States and cities with the highest number of digital transactions at physical touch points in Q1 2022 are (States): 1. Maharashtra 2. Tamil Nadu 3. Karnataka 4. Andhra Pradesh 5. Kerala 6. Gujarat 7. Delhi 8. Uttar Pradesh 9. Telangana 10. West Bengal
Cities: 1. Hyderabad 2. Bengaluru 3. Chennai 4. Mumbai 5. Pune 6. Delhi 7. Kolkata 8. Coimbatore 9. Ahmedabad 10. Vadodara.
But credit and debit cards are not dead, yet
While UPI transactions are galloping, the feeling that it foresaid the death of credit and debit cards usage seems vastly exaggerated.
The report said credit cards accounted 7% of transactions but 26% of value, which suggest that customers still prefer to use their credit cards for high value transactions. Debit cards account for 10% of transactions, but only 18% in value – the volume and volume has shrunk from previous years and is likely because of the rise of UPI.
The top remitter banks were State Bank of India, HDFC Bank, Bank of Baroda, Union Bank and Paytm Payments Bank while the top Beneficiary Banks were Paytm Payments Bank, State Bank of India, YES Bank, Axis Bank and ICICI Bank.
The total number of credit and debit cards in circulation by end of Q1 2022 was 991.28 million. While the number of outstanding credit cards increased by 19% from 62.04 million in March 2021 to 73.6 million in March 2022, outstanding debit cards increased by only 2% from 898.20 million to 917.66 million during the same period. In fact, during Q2 2022, about 23 million debit cards were withdrawn from circulation which could possibly be a correction in reported numbers by banks or the closure of inactive accounts.
As of March 2022, the top credit card issuing banks were HDFC Bank, SBI, ICICI Bank, Axis Bank and RBL Bank while the top debit card issuing banks were SBI, BOB, Union Bank, Canara Bank and Punjab National Bank.
The Worldline report said customers are getting more comfortable to make online purchases via credit cards for big ticket size transactions while debit cards are more frequently used for small ticket size purchases at physical touchpoints. Value added services like EMI, BNPL are enabling customers to opt for high value products and services using their cards.
PhonePe, Google Pay, Paytm dominate
As of Q1 2022, the top UPI Apps in terms of volume were PhonePe, Google Pay, Paytm Payments Bank App, Amazon Pay, Axis banks App while top PSP UPI Players were YES Bank, Axis Bank, State Bank of India, HDFC Bank and Paytm Payments Bank. Among the top UPI Apps, Phone Pe, Google Pay and Paytm accounted for 94.8% of UPI transactions volume and 93% of UPI transactions value as of March 2022. The Average Ticket Size (ATS) for UPI P2P transactions was INR 2455 and INR 860 for P2M transactions as of March 2022.
"With merchant adoption for UPI growing swiftly, the ATS of UPI P2M is witnessing a steady upward growth while ATS for P2P transactions in inching down but that is an effect of the volume of transactions as well as a move to P2M transactions. P2M transactions recorded a 24% increase in Q1 2022 as compared to Q1 2021," the report said.
In Q1 2022, out of total UPI volumes, 56% transactions were P2P while 44% were P2M; in terms of value, P2M transactions generally contributed to about 19% of UPI transactions.
In Q1 2022, frequently visited physical merchant categories like grocery stores, restaurants, clothing and apparel, pharmacy and medical, hotels, jewellery retail, specialty retail, household appliances and departmental stores together accounted for over 60% in terms of volume and about 58% in terms value. In the online space, e-commerce (shopping for goods and services), gaming, utility & financial services contributed to over 85% transaction in terms of volume and 47% in terms of value.
