UPI Transactions Surge In October On Festival Spending
In the wake of the festival season-led spending spree, transactions on the Unified Payments Interface (UPI) network recorded a significant uptick in October, surging over 8 percent. The month saw a record-breaking 1,141 crore transactions, surpassing the earlier record of 1,058 transactions in August and marking an 8.05 percent increase from the previous month. Year-on-year, UPI transactions showed a remarkable 56 percent growth, according to data from the National Payments Corporation of India (NPCI).
The surge in UPI transactions during October was primarily attributed to the festive season, leading to heightened consumer engagement, particularly in the e-commerce sector. The role of micro-transactions has to be emphasised in supporting transaction volumes.
In terms of transaction value, UPI experienced an 8.61 percent increase, processing a record ₹17.16 lakh crore worth of transactions compared to ₹15.80 lakh crore in the previous month. This represented a 42 percent increase in transaction value compared to the same period last year.
The growth in UPI transactions has remained consistently strong, with the value of transactions growing by over 40 percent and the volume of UPI trades surging by over 50 percent in the current fiscal year so far. In the previous fiscal year (FY23), the UPI platform processed 8,376 crore transactions amounting to ₹139 lakh crore, a significant increase from 4,597 crore transactions worth ₹84 lakh crore in FY22.
Experts in the field anticipate continued robust growth in UPI transactions, particularly in Person-to-Merchant (P2M) transactions. It is highlighted that the sustained growth in P2M transactions is acting as a driving force behind UPI”s increasing transaction volumes. The surge in UPI transactions increased digital adoption among both customers and merchants, along with continuous customer onboarding facilitated by third-party payment applications and incentive programs.
The share of P2M transactions in total UPI transactions has been steadily increasing, reaching 57.5 percent in June 2023, up from 40.3 percent in January 2022, and this trend is expected to continue. P2M transactions during the first half of the year witnessed a 119 percent year-on-year increase in transaction volume, reaching ₹2,915 crore, while the transaction value grew by 72 percent to ₹19 lakh crore. In contrast, P2P transaction volume grew by 22 percent, reaching 2,275 crore, with the value of transactions rising by 41 percent to ₹64 lakh crore.
As the festive season approaches and the third quarter progresses, the anticipation of increased shopping and travel transactions is going to further boost UPI transaction volumes, according to Harish Prasad, Head of Banking-India at FIS. A report by PwC India projects UPI transactions to exceed 100 crore transactions per day by FY27, with UPI expected to dominate the retail digital payments landscape, accounting for 90 percent of total transaction volumes over the next five years.
