UPI has seen exponential growth between March 2018 and March 2019 with monthly transaction volumes growing 4.5 times to 799.54 million over the past one year.
In January this year, the number of UPI transactions
stood at Rs 1.09 trillion, a little more than Rs 1.05 trillion worth of transactions recorded by the cards. In February, the number of UPI transactions
stood at Rs 1.07 trillion and the amount transacted through cards was Rs 93,998 crore.
In its initial days, a major chunk of UPI transactions were peer-to-peer (P2P) transactions and gradually, it has started to impact the person-to-merchant (P2M) segment also.
Over a period of time, UPI is expected to takeover older modes of digital payments.
UPI is a system that allows account holders of all banks to send or receive money from their smartphones without the need to enter their net banking user ID or password, and has fast caught on since the time it became operational in August 2016 under the 'Digital India' initiative.
Many people have started using the UPI service to pay for offline purchases, bill payments, cab-rides, among several other utilities.
Moreover, the declining number of ATMs in India is likely to further boost mobile banking, which is growing rapidly in a country with the world’s largest millennial and Generation Z populations. The number of mobile banking transactions grew 65 times in the past five years alone.
“People are shifting to mobile apps,” said Ashutosh Khajuria, chief financial officer at Federal Bank Ltd. “It’s too early to write an obituary on ATMs but it’s certainly declining. No one will invest in a declining proposition.”