In September, UPI bucks the trend to register highest-ever volume

After a few months of tepid volume, t he governmentowned Unified Payments Interface (UPI) is back on the 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 ~1.61 trillion. 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 ~1.54 trillion, respectively. The UPI platform came into being in August 2016.

Data from National Payments Council of India (NPCI), which manages UPI, shows 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 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, the telecommunication industr y ’s debt is ballooning and Indian banks are battling 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 Centre 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 the UPI. This had led to a host of retailers and supermarket chains to market the UPI and card payments at their cash counters.

According to reports, the government is also planning to incentivise the use of QRcodes (used for UPI payments) by offering merchants tax incentives.