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The Unified Payment Interface (UPI) saw an increase of 13% in the total transaction volumes taking place between January and February 2018, according to data published by the National Payments Corporation of India (NPCI). The NPCI is a private company owned by Indian banks, and owns and operates payments systems such as UPI and IMPS.
The total number of transactions in February 2018 were around 39.8 times higher than in the same month last year. The amount transacted increased by 23% to Rs 19,126.2 crores over January 2018. The amount transacted in February 2018 was 10 times higher than in the corresponding month last year. In February, the number of transactions and amount transacted occurred per day, as a result, were at their highest peak.
1. UPI transactions have been growing since launch. There appears to have been a hockey-stick effect that has taken place in the last five months. Note that Google Tez launched on September 18, 2017, and had reported 140 million transactions for the month of October and November since launch, apart from 12 million users. If you look at UPI transactions on a per day basis for each month, there has been a continuous increase, as indicated in the chart below.
However, the increase in the number of transactions should be taken with a pinch of salt as PhonePe CEO Sameer Nigam pointed out that these are artificial as most new users are only doing P2P transactions worth Rs 1 in hopes of getting a cashback in their accounts. In a blog post, PhonePe said that the high number of transactions on Paytm was “simply not representative of normal user behaviour on the UPI network”, adding that:
“Just 40,000 unique consumers did 500+ transactions each in February on Paytm. Paytm’s average transaction value is less than Rs 40. In contrast, 6,000,000 unique customers did 5 transactions each in February on PhonePe. Our average transaction value is over Rs1,800,” the PhonePe blog post read.
Paytm had claimed that UPI based transactions on its platform touched 68 million in February, which is up 33.3% from 51 million transactions in January. This meant that 40% of all UPI transactions were handled by Paytm giving it the lead in the total number of transactions for the month. The company started accepting UPI payments on its platform in November 2017.
Note that Whatsapp has also started rolling out payments, but it is a limited rollout, and does appear to violate UPI guidelines, with the intent to create a closed ecosystem. Our analysis of that rollout here.
2. The number of transactions grew by 19.6 million in February 2018 whereas the total amount transacted increased by Rs 3,555 crores. In January 2018, volume had increased by 6.4 million and amount transacted had grown Rs 2,426.9 crores.
3. The average amount per transaction rose to Rs 1,116 for February 2018. It has been trending down, with an increase in the number of transactions. Even then, it has remained above of Rs 900 mark.
4. The number of banks on UPI increased to 86 in December 2018.