If the upgraded version of UPI is able to meet its stated goals, there is a possibility that more offline merchants may switch to UPI-based payments from POS machines.
The value of monthly transactions made using the Unified Payments Interface (UPI) crossed the Rs 1-lakh-crore mark for the first time in December 2018, show data released by the National Payments Corporation of India (NPCI).
During the month, the UPI channel recorded 620 million transactions worth `1.02 lakh crore, up from 525 million transactions worth `82,232 crore in November and 145 million transactions worth `13,144 crore in December 2017.
Launched in August 2016, UPI is a bank account-to-bank account payment feature that allows money to be transferred using details no more than a phone number. Earlier this year, NPCI launched UPI 2.0 – an upgraded version of its UPI service, which, in addition to other things, will allow users to access a digital invoice to help them view and verify a merchant’s credentials and ascertain if the invoice has come from the correct merchant. Customers can pay seamlessly once they have verified the amount and other details in the invoice.
While NPCI does not release disaggregated data on peer-to-peer (P2P) and P2M UPI payments, it is commonly accepted that UPI growth had largely been led by P2P transactions for much of its journey, even as contributions from merchant transactions have been rising in recent months. If the upgraded version of UPI is able to meet its stated goals, there is a possibility that more offline merchants may switch to UPI-based payments from POS machines.
Indeed, State Bank of India and HDFC Bank have already begun to equip offline merchants with machines which enable acceptance of card payments, UPI payments as well as payments initiated through the respective banks’ wallets. In its presentation for the quarter ended September 2018, SBI said that the share of UPI and Yono (the bank’s app) transactions in all transactions recorded by the bank rose to 8.7% from 0.8% at the end of September 2017.