UPI transactions bounce back in July after slight dip

By Shashank Didmishe

The Unified Payments Interface (UPI) transactions resumed their upward trajectory in July after a slight dip in June, with the platform processing transactions to the tune of Rs 10.63 trillion during the month. In volume terms, the UPI transactions in July were at 6.28 billion, as per data released by National Payments Corporation of India (NPCI). UPI transactions in the country had crossed Rs 10 trillion-mark in May.

The number of transactions processed by the platform grew by 4.8% on a month-on-month (m-o-m) basis in value terms. In volume terms, the number of transactions increased by 7.2% m-o-m in July. The number of transactions had declined by 1.5% in volume terms and 2.6% in value terms in June.

On a year-on-year (y-o-y) basis, the transactions grew by 93% in volume terms and 75% in value terms in July.

UPI transactions have continued to show strong trends largely at the expense of debit cards which have seen sluggish growth, Kotak Institutional Equities said in a report. Although debit card transactions have declined, credit card transactions have improved in terms of yearly growth trends, the brokerage said.    

The Reserve Bank of India (RBI) in June allowed linking of credit cards on the UPI platform, but the platform will be linked only with Rupay credit cards at the initial stage. NPCI is working towards initiating the process in two months, Dilip Asbe, chief executive officer of NPCI had recently said at an event.

With the evolution of alternate payment instruments such as UPI, the growth of market share of credit cards in the payment industry could get impacted, HSBC Global Research said in a report.

The NPCI is trying to bring some respite to the smaller merchant from merchant discount rates (MDR), while those merchants who are currently servicing credit cards can continue to pay these rates. While credit cards attract higher MDR charges for merchants, the UPI does not deduct additional charges. Despite the announcement for linking UPI with credit cards, there is no clarity on whether credit card transactions made from UPI will attract MDR.

“To offer more avenues and greater convenience to users in making payments through UPI platform, feasibility of linkage of credit cards and credit components of banking products to UPI shall be explored,” the RBI said in its Payments Vision 2025 document.

The RBI is already working with the Monetary Authority of Singapore towards linking UPI with PayNow. The NPCI is expecting the linkage to happen in the next few months to allow cross-border remittances, Asbe said.