UPI transactions spike on back of version 2.0; August volume up 32%

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Transactions via the unified payments interface (UPI), the country’s flagship payments platform, saw a sharp rise in August against a marginal drop of 4.35 per cent in July. The jump comes as new features, in the form of UPI 2.0, were introduced in mid-August.

UPI transaction volume in August rose 32 per cent to 312.02 million from 235.65 million in July.

The drop in July was mainly due to transfers to the same account not being considered -- which amounted to 38.1 million for the month. From August 1, the National Payments Corporation of India blocked transactions where the payer and the payee account are the same.

The new features of UPI 2.0 like overdraft facility and invoicing among others were specifically targeted towards increasing merchant-to-peer transactions through UPI. Previously, a substantial number of the transactions were peer-to-peer. UPI 2.0 is also expected to boost the value of transactions, especially since the limit was increased from Rs 100,000 to Rs 200,000.

The value of UPI transactions in August stood at Rs 542.12 billion, against Rs 458.45 billion in July, a rise of 18 per cent.

While players like Paytm and PhonePe have already been pushing merchant UPI transactions, Google Pay has been vocal about targeting smaller merchants in India to expand the payment landscape. UPI 2.0 will support these companies in bringing merchants onto UPI. Industry experts say that the volume could cross over 500 million in the current year.

WhatsApp Pay, the payments feature of the Facebook-owned instant messaging app which is based on the UPI, is expected to be a game-changer, given its large base of users. However, it is still awaiting government approval for full introduction. The payments space in India has seen a major shift in the past one year. While mobile wallets saw a comeback in the past few months, the growth of number of transactions in debit and credit cards seems to have slowed over other digital payment modes. However, mobile banking space grew almost twice over the previous year. 

With UPI looking at capturing a greater share in merchant payments, these dynamics are set to change again.

The UPI 2.0 was launched on August 16.

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