According to a report based on data from the National Payments Corporation of India (NPCI), Person-to-Merchant (P2M) transactions in India are projected to constitute 75% of all United Payments Interface (UPI) transactions by 2025. Currently, 56.1% of UPI transactions are P2M transactions.
Global payments service provider Worldline’s “India Digital Payments Report for H1 2023” revealed that UPI transactions in India increased by 62% in the first half of 2023 compared to the same period in 2018, largely driven by P2M transactions.
Between January and June 2023, there were 51.91 billion UPI transactions, with 29.15 billion being P2M payments, accounting for approximately 56.1%. The remaining 22.75 billion transactions are peer-to-peer (P2P) transfers.
P2M transactions are growing significantly faster than P2P transactions, with a 119% increase compared to a 41% rise in P2P transaction volume in the first half of 2023.
Despite the absence of transaction fees for merchants, this surge in P2M transactions highlights the widespread acceptance of this payment method by both consumers and businesses.
In addition to cost savings, merchants also value the security and promptness of payments offered by UPI. UPI is expected to continue its rapid growth and become deeply ingrained in the population as P2M transactions gain prominence.
The report also noted that the Average Ticket Size (ATS) for UPI transactions in the first half of 2023 was Rs. 1,604 (US$ 19.29), a 10% decrease from Rs. 1,774 (US$ 21.34) for the same period in 2012. Despite the 62% increase in transaction volume, UPI is now being used more frequently for smaller payments.
In terms of value, UPI transactions increased by 47% in the first half of 2023, reaching Rs. 83.17 trillion (US$ 1.0 trillion) compared to Rs. 56.59 trillion (US$ 680.62 billion) in the same period in 2022.
The reduction in overall ATS is also driven by smaller ATS ticket sizes for P2M transactions. ATS for P2P transactions increased by 15% from Rs. 2,442 (US$ 29.37) to Rs. 2,812 (US$ 33.82), while P2M transaction ATS decreased by 21% from Rs. 839 (US$ 10.09) to Rs. 659 (US$ 7.93).
UPI’s near-universal acceptance by users and businesses, particularly in rural India, has been a significant driver of its expansion.
The report also highlighted that three apps—PhonePe, Google Pay, and Paytm—account for 95.68% of all UPI transactions in India by volume and 93.65% by value as of June 30. PhonePe’s market share has increased both in volume and value, while Paytm has taken over Google Pay’s market share.
Due to Paytm’s growth, its Paytm Payment Banks topped the list of UPI beneficiary banks with a volume of 11.6 billion, followed by State Bank of India (SBI) and Yes Bank. HDFC Bank was the top UPI remitter bank, followed by Union Bank of India and Bank of Baroda.
The appeal of digital payments for consumers and businesses alike has made it an essential feature, according to Ramesh Narasimhan, CEO (India) at Worldline.
