'1 billion daily transactions': Future of UPI in India
What's the story
India's Unified Payments Interface (UPI) has been making global inroads. The indigenous payment system recently arrived in France, making a huge step on the international stage. UPI's status isn't any different in India as well. It has changed India's once cash-based economy into a predominantly digital one. According to the National Payments Corporation of India (NPCI), UPI has the potential to become even bigger.
Context
Why does this story matter?
India's rise to the top of the world in real-time digital payments is closely tied to the UPI revolution. Ever since its introduction in 2016, UPI has grown in popularity. The payment system's domestic popularity didn't go unnoticed on the global stage. It has swiftly become a global cross-border payment solution. But UPI seems to have more distance to cover.
Present
UPI accounted for 52% of digital transactions in FY22
An India without UPI is unimaginable now. In June, UPI transaction volume was at 9.33 billion, while transaction value touched Rs. 14.75 trillion. In May, the transaction volume and value stood at 9.41 billion and Rs. 14.89 trillion, respectively—the highest ever. Per the Economic Survey 2023, UPI payments accounted for 52% of all digital transactions in FY22. In FY19, it was a mere 19%.
Replacement
UPI has effectively replaced currency notes in circulation
India was heavily cash-reliant for a long time. The advent of UPI has changed that. According to a recent report by the State Bank of India (SBI), UPI has effectively replaced most of the currency notes in circulation. Cash usage in India has declined considerably. Per the FSI Global Payments Report 2023, the share of cash in POS transaction value was 27% in 2022.
Potential
UPI can grow 10 times its current size: NPCI chief
What is surprising is UPI hasn't even reached a quarter of its potential. At least, that's what NPCI chief Dilip Asbe says. Speaking at Moneycontrol's 'Start-up Conclave,' he said the payment system has only achieved 10% penetration and can grow 10 times more. According to Asbe, daily UPI transactions will touch one billion in the next three years.
Global
UPI is likely to enter North America soon
UPI's growth in the coming years will be intertwined with its global foray. NCPI's international arm, NIPL, has already partnered with Singapore's PayNow and France's Lyra Networks. India has also inked a pact to bring UPI to UAE. We will soon see UPI in countries in the Middle East and North America as well where Indians have a considerable presence.