Credit and finance for MSMEs: Peer-to-merchant (P2M) UPI transactions overtook peer-to-peer UPI transactions in volume in the second half of the calendar year 2022, signalling the deep entrenchments of UPI P2M transactions, according to a report by payment services company Worldline on Monday. “It (P2M) is being used for large as well as very small transactions, the latter being the most difficult to move away from cash.”
The UPI P2M share in total UPI transactions gradually increased from 40 per cent at the beginning of the year to 50 per cent or at par with the share of UPI P2P share in August before moving up to 53 per cent in October and ending the year at 54 per cent while UPI P2P transactions share declined to 46 per cent in December from 60 per cent in January last year.
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UPI’s total transactions had increased by 91 per cent in 2022 to more than 74.05 billion from 2021 while in terms of value, UPI transactions increased by over 76 per cent in 2022 to Rs 126 trillion (Rs 126 lakh crore) vis-a-vis 2021.
Overall, among 87.92 billion transactions amounting to Rs 149.5 trillion in 2022 from cashless modes including UPI, cards and prepaid payment instruments (PPIs), UPI P2M transactions had a share of 40 per cent in comparison to 44 per cent share of UPI P2P transactions which were not necessarily payments only but potentially money transfers as well among people.
The P2M transaction count is expected to further go north with the National Payments Corporation of India (NPCI), which operates retail payments and settlement systems in the country, partnering with various payment aggregators in March this year to enable merchant transactions through RuPay credit cards on UPI.
Earlier, UPI customers were able to make transactions only through their bank accounts, overdraft accounts, and prepaid accounts. There are over 5 crore merchants on the UPI platform currently.
In another move to benefit merchants and small businesses as well via UPI, the Reserve Bank of India (RBI) earlier this month had proposed pre-approved bank credit on UPI. So far, UPI transactions were enabled between deposit accounts at banks, sometimes intermediated by pre-paid instruments including wallets.
“The year 2022 witnessed an ever-increasing adoption of digital payments, with UPI leading the way. Popular payment instruments like UPI, cards, PPIs were already clocking over Rs 149.5 trillion worth of digital transactions in 2022. In 2023 and beyond, Worldline will continue to collaborate with our merchants, partner banks, fintechs, e-commerce players and invest in the technology and infrastructure needed to build a more inclusive and open financial ecosystem, said Ramesh Narasimhan, CEO, Worldline India.
UPI P2M transactions share by value, however, only grew from 20 per cent in January to 23 per cent in December last year while the share in overall cashless transactions value of Rs 149.5 trillion stood at 18 per cent.
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