The Impressive Success of UPI: A Review of Transaction Volume and Value
The article discusses the impressive success of India's Unified Payments Interface (UPI) in terms of transaction volume, value and versatility.
The success of India's Unified Payments Interface (UPI) has been nothing short of impressive, with 74 billion transactions processed between January and December 2022, valued at a total of $1.45 trillion. This equates to an average of $21.25 per transaction and 7.8 billion transactions per month in December alone.
One of the key factors contributing to the success of UPI is the network effect. With 382 banks live on the platform as of December 2022, UPI has become a widely accepted and trusted payment method, facilitating everything from small-value peer-to-peer transactions to large-value peer-to-merchant payments. As more individuals and merchants adopt UPI as a payment method, it becomes increasingly convenient and useful for everyone. This creates a virtuous cycle where more people use UPI, which in turn drives further adoption.
Here are the data taken and summarized from the NPCI website (refer to the footnote for the sources) ...
Volume of UPI Transactions
Monthly (December 2022):
7.8 billion transactions per month (782 crores)
YTD (January 2022 - December 2022):
74 billion transactions(7400 crores)
Value of UPI Transactions
Monthly (December, 2022):
$160 billion (Rs. 1,282,055 crores)
YTD (January, 2022 - December, 2022):
$1.45 trillion (Rs. 11,590,024 crores)
Average UPI Transaction Per User
Monthly (December, 2022):
$19.88 (Rs. 1638)
YTD (January, 2022 - December, 2022):
$21.25 (Rs. 1700)
Number of Banks Live on UPI
Monthly (December, 2022):
382
The number of participating banks has swelled over the years, and this is also a big part of the success of UPI.
UPI Transactions by Volume
Monthly (December, 2022):
P2P – Peer to Peer - (46%)
3.6 billion transactions (360 crores).
Rs. 0 to 500 – 1.96 billion transactions (196 crores) – 55%
Rs. 500 to 2000 – 0.80 billion transactions (80 crores) – 22%
Rs. 2000 and above – 0.84 billion transactions (84 crores) – 23%
P2M – Peer to Merchant - (54%)
4.2 billion transactions (422 crores).
Rs. 0 to 500 – 3.5 billion transactions (350 crores) – 83%
Rs. 500 to 2000 – 0.50 billion transactions (50 crores) – 12%
Rs. 2000 and above – 0.21 billion transactions (21 crores) – 5%
UPI Transactions by Value
Monthly (December, 2022):
P2P – Peer to Peer - (58%)
Total $124 billion (Rs. 991,748 crores).
Rs. 0 to 500 – $4 billion (Rs. 32,168 crores) – 3%
Rs. 500 to 2000 – $12.2 billion (Rs. 97,323 crores) – 10%
Rs. 2000 and above – $108 billion (Rs. 991,748 crores) – 87%
P2M – Peer to Merchant - (42%)
Total $36 billion (Rs. 290,306).
Rs. 0 to 500 – $5.3 billion (Rs. 42,282 crores) – 15%
Rs. 501 to 2000 – $6.5 billion (Rs. 51,735 crores) – 18%
Rs. 2001 and above – $24.5 billion (Rs. 196,289 crores) – 67%
One key insight from the data is that the majority of UPI transactions are relatively small in value. This suggests that UPI is being widely used for everyday purchases and financial transactions rather than just for large or infrequent transactions. This level of ubiquity is a major factor in UPI's success and adoption rate.
Another insight is the relatively even split between P2P and P2M transactions, both by value and volume. This shows that UPI is being used both for person-to-person financial transfers, as well as for payments to merchants. This demonstrates the versatility of the UPI platform and its ability to support a wide range of payment scenarios.
As India continues to grow and emerge as one of the top three economies in the world, it is likely that UPI will play a central role in driving financial inclusion and the digital economy.
Sources used in this article: