The Unified Payments Interface (UPI) has been a game-changer in India's financial landscape, revolutionizing the way Indians transact and paving the way for a cashless economy. As of June 2023, UPI transactions in India were worth over 14.7 trillion Indian rupees.
But this massive success of UPI is gravely affecting the two other popular channels of payments and settlement - NEFT (National Electronic Fund Transfer) platform and debit cards.
According to the latest data of the Reserve Bank of India, the value of UPI transactions grew 46% year on year in November this year, while NEFT rose by less than half the pace of UPI at 17.5%.
On the other hand, the debit card transactions contracted by 6.6% year on year in October.
According to a report by PayNearby, a branchless banking and digital network, UPI is now establishing a ground even in semi-urban and rural areas. UPI transactions saw 118% and 106% increases in volume and value, respectively in semi-urban and rural areas.
Additionally, UPI is emerging to be the preferred choice for e-commerce transactions. It is assured to become the universal choice for B2C and C2C transactions while smaller B2B dealings will witness a seamless integration of UPI and cards. But for the substantial B2B transactions, NEFT will continue to stand as the preferred mode.
Besides UPI's success and growth can be attributed to its user-friendly interface, support from regulators, rapid adoption, and its role in India's digital transformation and global expansion, the Reserve Bank of India is also seen to be enhancing UPI transactions.
According to RBI’s recent statement on developmental and regulatory policy, it announced measures to catalyze the ongoing digital drive including the enhancement of UPI transactions limit for payments to hospitals and education institutions from Rs 1 lakh to 5 lakh per transaction, higher limits for e-mandates for recurring online payment without any additional factor of authentication from Rs 15,000 to Rs 1 lakh for mutual fund subscriptions, insurance premium and credit card payments.
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