UPI Transactions Surge: India Digital Payments Report H2 2023

The digital payments landscape in India has witnessed significant shifts in the latter half of 2023. According to a recent report by global payment services leader Worldline, Unified Payments Interface (UPI) transactions have surged by an impressive 56% year-on-year (YoY) during the second half of last year (H2 2023). Let’s delve into the key findings:

1. UPI Transactions Surge:

• In H2 2023, the volume of UPI transactions reached 65.77 billion, a substantial increase from 42.09 billion in H2 2022.
• The value of UPI transactions also soared, rising by 44% from Rs 69.36 trillion to Rs 99.68 trillion during the same period.
• Notably, PhonePe, Google Pay, and Paytmemerged as dominant UPI app players, accounting for 95.4% of all transactions by volume in December 2023.

2. Average Ticket Size (ATS) Decline:

• Despite the surge in volume and value, the average ticket size (ATS) for UPI transactions experienced an 8% decline, dropping from Rs 1,648 to Rs 1,515.
• Peer-to-peer (P2P) transactions bucked this trend, showing a 4% YoY growth in ATS, while peer-to-merchant (P2M) transactions witnessed a 9% decrease.
• The ATS continues to be on a secular downtrend suggesting a deeper embedding of UPI – it is being used for smaller or micro transactions and this dip is being primarily driven by the growth in person-to-merchant (P2M) transactions.

3. Point of Sale (PoS) Terminals and Card Circulation:

• The proliferation of PoS terminals reached unprecedented levels, with 8.56 millionterminals in circulation (a 26% increase).
• Private sector banks dominated the PoS space, holding 73% market share, while public sector banks accounted for 18%.
• Axis Bank, ICICI Bank, HDFC Bank, State Bank Of India, RBL Bank, Paytm Payments Bank,
  IndusInd Bank, Kotak Mahindra Bank, Yes Bank, and Canara Bank accounted for 94% of terminals deployed as of December 2023.
• The total number of cards in circulation grew modestly, reaching 1.384 billion in December 2023 (a 6% YoY increase).
• Credit cards witnessed the highest upsurge, growing by 21% to 97.9 million.
• Credit card transactions (volume and value) have been increasing steadily solidifying its
  position as the preferred channel for high value transactions. This is being observed on both
  PoS as well as online transactions.
• Debit card transactions (volume and value) have been falling steadily – the UPI effect.
• NETC Fastag is constantly growing and will continue seeing constant growth.

Also Read:Credit Line on UPI: 5 Opportunities Shaping the Future of Finance

4. P2P and P2M Transactions

• P2P transactions: 27.04 billion (34% increase from H2 2022)
• P2P transaction value: INR 74.24 trillion (38% increase from H2 2022)
• P2M transactions: 38.73 billion (77% increase from H2 2022)
• P2M transaction value: INR 25.43 trillion (62% increase from H2 2022)

• Average ticket size (ATS) of all UPI transactions in H2 2023: INR 1515 (8% decrease from H2 2022)
• ATS of P2P transactions in H2 2023: INR 2745 (4% increase from H2 2022)
• ATS of P2M transactions in H2 2023: INR 656 (9% decrease from H2 2022)
• Decrease in overall ATS driven by P2M transactions, indicating the rise of microtransactions and increasing willingness to use UPI.

UPI maintains its position as the uncontested frontrunner, fueled by mobile transactions. As consumers increasingly embrace smartphone-based payment methods, fintechs must adapt to diverse payment channels. The evolving dynamics of digital commerce continue to shape transaction trends.

Disclaimer: The information provided is based on the report by Worldline and reflects the state of digital transactions in India during H2 2023.

Download Original Report: WorldlineIndia Digital Payments Report H2-3rdApril2024