India's UPI trading volume down 63% YoYwww.deekpay.com

## India's UPI Payment System: Hidden Concerns Behind Rapid Growth India's Unified Payments Interface (UPI) has made significant progress in the mobile payments space since its launch in 2016, making it one of the fastest growing mobile payments systems in the world. However, the latest data from February 2023 shows a YoY decline in UPI transaction volume and value, raising concerns about its growth prospects. Analysis of February 2023 UPI transaction data: Transaction volume fell 6.251 TP3T YoY to 7.53 billion. Value of transactions declined by 4.841 TP3T YoY to Rs 12.36 trillion. Nonetheless, year-on-year figures remain bright: Transaction volume grew by 66.41 TP3T YoY. The value of transactions grew by 49.471 TP3T YoY. A review of UPI's evolution: In March 2022, UPI transaction volume crossed the 5 billion mark for the first time. In May 2022, UPI transaction value reached a record of Rs 10.42 trillion. In December 2022, UPI transaction volume and value maintained strong growth to reach 7.83 billion transactions and Rs. 12.82 trillion respectively. In January 2023, UPI transactions again hit record highs with a volume of 8.04 billion transactions and a value of Rs 12.99 trillion. UPI Application Status and Challenges: Despite the huge success of UPI in India, cash transactions continue to dominate, especially in Tier II and Tier III cities. In February 2021, UPI transaction volume and value witnessed a YoY decline due to NPCI's volume cap restrictions on payment apps. PhonePe currently holds a 50.11 TP3T share of the Indian UPI market, but faces stiff competition from Google Pay and Paytm. The Indian government is aggressively promoting cross-border payments with the launch of UPI-PayNow connectivity in partnership with Singapore. Future Outlook: The Indian government is committed to promoting UPI with a target of 1 billion daily transactions over the next five years. NPCI is exploring linking UPI to credit cards and rolling it out to international markets. Summary: India's UPI payment system has been a huge success over the past few years, but it also faces challenges. Cash transactions still dominate, the market is highly competitive, and regulatory policies are having an impact on its growth. Going forward, UPI will need to overcome these challenges to achieve its ambitious goal of becoming the king of payment systems in the truest sense of the word.