Open Payment Gateway: India's UPI transactions to exceed $100bn by 2023

The Unified Payments Interface (UPI) consolidated its position as India's preferred digital payments platform in 2023, with significant growth in both transaction volume and transaction value. According to the latest data from the National Payments Corporation of India (NPCI), the number of UPI transactions crossed the 100 billion mark at the end of 2023. This figure is a significant leap from 38.74 billion transactions in 2021 and 74.04 billion in 2022.

Throughout 2023, India processed 117.68 billion UPI transactions totalling a whopping Rs. 182.84 trillion. This achievement reflects a year-on-year growth of 58.91 TP3T in transaction volume and 45.21 TP3T in transaction value.

The fourth quarter of 2023 witnessed a significant growth in UPI activity in India with 34.66 crore transactions recorded. This figure accounted for nearly 301 TP3T of UPI transactions for the year.These UPI payments totalled Rs 5,278,000 crore, which accounted for 28.871 TP3T of the total value of UPI transactions for the year.

The simultaneous growth in UPI transaction volume and transaction value provides interesting insights into consumer behaviour in the digital payments space in India. While the growth in UPI transaction volumes has far outpaced the growth in transaction amounts, it is clear that most Indians prefer to use platforms such as Google Pay, PhonePe, and Paytm, primarily for relatively small monetary transactions. This shift towards frequent micro-transactions suggests that consumers are increasingly confident in the reliability and security of digital payment platforms.

NPCI's data also shows that from January to December 2023, UPI transaction volumes grew by 491 TP3T per month.The rapid growth of UPI transactions in India can be attributed to several key factors.

One important factor is the growing popularity of UPI AutoPay, an innovative recurring payment mechanism offered by NPCI through the UPI platform. Recent reports indicate that UPI AutoPay is fast becoming the preferred choice of users across the country for efficient solutions such as bill payments, subscription renewals, insurance premium settlements and credit card bill clearance.

In addition, the recent increase in UPI transaction limit from Rs 15,000 to Rs 100,000 has played a key role in driving growth in transaction volumes and transaction amounts for the UPI AutoPay feature.

In December 2023, UPI transactions grew by 53.51 TP3T year-on-year to 12.02 billion. The value of these transactions reached Rs 18.23 trillion, growing at a CAGR of 42.21 TP3T.

In December 2023, India's Instant Payment Services (IMPS) transaction volume grew by 2.661 TP3T year-on-year to 498.8 million transactions. In terms of transaction value, the figure grew by 17.21 TP3T year-on-year to Rs 5.7 trillion.

As India crosses the 100 billion UPI transaction threshold by 2023, one thing is clear: India stands on the cusp of a financial revolution. The country is about to witness a surge in fintech innovation, attracting global players and unlocking previously untapped economic potential. Outside of urbanised areas, the growing popularity of UPI is expected to provide citizens in rural areas with more financial access and greater control over their lives. The journey towards a cashless India is not only a digital achievement but also a catalyst for revolutionary change and inclusive financial empowerment.