The volume of Unified Payments Interface (UPI)-based transactions grew to nearly twice that of transactions made through mobile wallets in February, showed data released by the National Payments Corporation of India (NPCI) and Reserve Bank of India (RBI).
With 674 million transactions worth Rs 1.07 lakh crore during February, UPI stood head and shoulders above mobile wallets, which together clocked 345 million transactions worth Rs 14,279 crore during the same month.
As UPI trotted out a 293% year-on-year (y-o-y) growth rate for the month, mobile wallet transactions managed to grow only by about 11% y-o-y.
While transaction data for wallets is unavailable for March 2019, UPI volumes nudged the 800-million mark last month. On the other hand, wallets have been struggling to make it to 400 million transactions.
The number of UPI transactions made using the UPI overtook that of mobile-wallet transactions for the first time in September 2018. The two channels had volumes of 406 million and 324 million, respectively, in that month.
READ ALSO | Here’s why Bata India was fined for Rs 3 paper carry bag
Industry executives say that the new ‘know your customer’ (KYC) guidelines brought in by RBI that came into force in March 2018 have led to many users abandoning wallets. Other factors that have led to the scales being tipped in favour of UPI are the launch of Google Pay in September 2017 and the conversion of former wallet player Paytm into a payments bank.
According to payment gateway provider Razorpay, 62% of all UPI payments in 2018 came through Google Pay, followed by PhonePe (11.9%) and Paytm (9.7%). “The growth in UPI has generally been synonymous with a decline in the number of wallet transactions,” Harshil Mathur, founder and chief executive officer, Razorpay, wrote in a blog post.
Some experts also expect UPI to begin taking share away from plastic in the coming years. Vivek Belgavi, partner and India fintech leader, PwC India, said, “I am putting my money behind non-physical channels or modes. So I think by 2020, almost 80% of the transactions made through cards (today) will be by UPI.”