If one needs proof that Indians have embraced digital payments, one simply needs to look at the record-breaking UPI transaction numbers that keep on increasing every month.
Total monthly transactions on Unified Payments Interface (UPI) registered a new record when it reached the 782 crore mark in December 2022 – a 7% jump from the previous month. UPI transactions crossed the 700 crore threshold in October 2022 for the first time.
December’s transaction number is the highest ever monthly transaction in UPI’s history.
Interesting Read: How India Paid in 2022: An Annual Overview of Digital Payments
Seeing the record-breaking number of UPI payments, Prime Minister Narendra Modi tweeted, “I like how you’ve brought out the rising popularity of UPI. I laud my fellow Indians for embracing digital payments! They’ve shown remarkable adaptability to tech and innovation.”
Recording the past growth of UPI
UPI was developed by the National Payments Corporation of India (NPCI) and was jointly established by the Reserve Bank of India (RBI) and Indian Banks Association (IBA) in 2016. It took off in a big way during the peak pandemic period of 2020-21. Since then it never looked back and kept on breaking its own record month after month.
UPI’s transaction value which was a mere Rs 38 lakh in July 2016 has now reached a whopping Rs 12.8 lakh crore in December 2022.
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Ever since its inception, UPI has gone through several developments in terms of adding new features and entering new global markets.
Following are the top 5 features of UPI:
- Interoperability: NPCI made UPI interoperable across all payment apps, which increased the adoption of UPI for digital payments. This meant that a user could use any BHIM UPI ID to send and receive money as well as create QR codes, scan, and pay using any BHIM UPI QR code.
- UPI Autopay: NPCI opened up UPI to create mandates for payments to be debited later automatically. This was a huge upgrade for individuals as well as businesses that relied on the subscription model.
- Launch of UPI Lite: NPCI launched UPI Lite in 2022 to process low volume transactions in a safe and secure environment. UPI Lite doesn’t utilise banks’ infrastructure and can only be used to transfer or accept less than Rs 200 per transaction.
- Available on feature phones: In March 2022, the RBI launched UPI for feature phones, which was termed as UPI 123Pay. Users will have to call an IVR number, or give a missed call to a specific number to make and accept money using UPI on their feature phones. It has the potential to attract 400 million users from rural and remote areas.
- Linking of credit cards: This was a revolutionary addition to the UPI payment system. In June 2022, the RBI allowed the linking of credit cards with UPI to make payments. Before this, one could only connect their debit cards with UPI.
How UPI benefits merchants
Since UPI is pretty strong when it comes to peer-to-merchant payments, businesses stand to benefit from accepting money via UPI. NPCI and RBI have worked together to ensure businesses find UPI payments fast, safe, easy, and economical to use.
Since the numbers themselves are evidence that a large number of customers in India prefer using UPI for their purchases, it will be self-harming if merchants still don’t accept money via UPI.
Moreover, to encourage businesses to accept money through UPI, RBI and the finance ministry have not levied any MDR charges on UPI payments since its inception. This denotes the biggest push for merchants to accept money through UPI.
Interesting Read: Here’s a Look at the Growth of the UPI Ecosystem Over the Years in India
Thus, it’s important that while choosing a payment gateway to work with, merchants should ensure their PG partner offers 0% MDR on all UPI payments.
To encourage customers to pay via UPI, merchants can enhance their payment experience by enabling UPI Smart Intent during checkout.
UPI Smart Intent flow improves customers’ payment experience by showing them the payment apps which are ready for UPI payment on their phones. UPI Smart Intent reduces the payment friction customers might face during the payment process.
Another way merchants can improve customer experience is by enabling UPI Push or UPI InApp Flow on their checkout page. UPI Push will display the customer’s bank account details connected with their UPI handle on the payment page. This payment flow will increase success rate by 1.3 times compared to UPI Intent transactions.