MobiKwik Payment Gateway : UPI Payments - Unravelling the Biggest Change to Hit the Industry

The UPI initiative, backed by the current government, has been in the limelight for the past 14 months. With the rapid growth of UPI payments, major players across the globe have jumped on board, including Google, which launched Tez, and Facebook, which offers UPI payments in WhatsApp.Domestic players are not far behind, with PhonePe and PayTM vying for market dominance with a host of other UPI apps.

While UPI payments have transformed the person-to-person (P2P) payments space, they have also posed a huge challenge to wallet payments in the wake of KYC regulations, causing many users to stop using wallets. However, how have UPI payments fared in the person to merchant (P2M) space, which accounts for the bulk of transactions. This does determine the stickiness of long-term usage as UPI aims to be the payment tool for business transactions nationwide.

As the leading payment gateway provider in the country, PayU has analysed our data to decipher the progress of UPI Payments, which was enabled across all its merchant products in August 2017.PayU is also steadily progressing with plans to double its monthly transaction volume to approximately $2.5bn by March 2019 across its core business. Our data reveals the following diverse insights:

How do they compete among the many players in the market offering UPI payment services?

Interestingly, BHIM maintained a steady position while Tez and PhonePe became the dominant private players. Here are some other key insights:

The key players in the UPI market are PhonePe, Tez, and BHIM.

PayTM has a low but steady share of the UPI market, while Tez has grown its market share significantly over time.

ICICI is ranked fourth among UPI apps and with WhatsApp making its UPI ID public, ICICI's share is likely to grow further in the coming months.

BHIM's market share continues to decline in the face of competition from private players.

Others are mainly accounts created on banking apps like Axis, Kotak, SBI etc.

Growth in average transaction value of UPI payments

What's more interesting is how the average transaction amount has emerged over the past few months. Most participants offer attractive cash rebates to their customers to incentivise the use of UPI payments. Here's how the data compares:

Notably, ASV trends are similar to debit cards. These numbers have remained stable and have shown a growth trend comparable to wallet and credit card transactions. This suggests that UPI payments have become organically and widely used in addition to the offers provided by various players.

On how wallets have fared since the rise of UPI payments:

Wallet continues to lose share to UPI.

How are UPI payments used in different industries and how do they compare to other payment methods?

Figure 1: UPI's GMV by Segment

E-commerce is the dominant segment, while professional and technical services are the second largest. How does this compare to wallets losing market share to UPI and credit cards, which have such similar transaction behaviour to debit cards?

Figure 2: GMV of Wallet by Segment

Figure 3: GMV of debit cards by market segment

Based on PayU's insights, here are the key takeaways from this article:

PhonePe, Tez and BHIM are the main players dominating UPI payments.

UPI has grown by 1,881 TP3T in the last 6 months, while wallets, credit/debit cards have grown by 411 TP3T.

The e-commerce segment dominated with a UPI payment GMV of $72%, followed by technology services and education.

In this study, it is clear that UPI payments will be ready to sweep the country in the next few months!

Check out the summary of this article as reported by leading Indian news dailies.

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