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The Unified Payments Interface (UPI) is a groundbreaking system that integrates multiple bank accounts into a single mobile application, enabling users to manage diverse banking functionalities, conduct peer-to-peer transactions, and process merchant payments seamlessly. Launched by the National Payments Corporation of India (NPCI), UPI aims to streamline digital transactions, enhance security, and offer unparalleled convenience to users. The system was piloted with 21 member banks on April 11, 2016, and launched by Dr. Raghuram G. Rajan, then Governor of the Reserve Bank of India (RBI). By August 2016, banks began uploading UPI-enabled apps to the Google Play Store, marking a significant milestone in India’s journey toward a cashless economy.
Unified Payments Interface (UPI) was launched in April 2016, as evidenced by the first non-zero data points in July 2016, showing just 0.09 million transactions valued at ₹ 0.38 crores. After that, the subsequent expansion is nothing short of extraordinary. An incredible 13,440 million transactions, totalling ₹ 19,78,353.23 crores, were processed on the platform in March 2024. Over the period of these eight years, the volume of transactions increased at a nearly 343% CAGR, and the value of transactions increased at a CAGR of 591%. The ongoing growth in the number of participating banks is among the most notable features of UPI’s development. The number of banks associated with UPI increased from 21 in July 2016 to 572 in March 2024. Undoubtedly, this growth in the network of participating banks has helped UPI become widely used in India across a range of demographic groups and geographical areas. The growth trajectory of UPI can be divided into several distinct phases. From launch to early 2017, the initial phase saw modest adoption as the platform was being introduced and integrated across banks and payment apps. In March 2017, UPI handled 6.37 million transactions worth 2,425.14 crores monthly. The second phase, from mid-2017 to 2018, witnessed accelerated growth. This period coincides with the aftermath of demonetization in India, which likely catalyzed the adoption of digital payment systems like UPI. In March 2018, monthly transactions surged to 178.05 million, valued at 24,172.60 crores. The third phase, from 2019 to early 2020, saw UPI firmly establish itself as a significant player in India’s digital payment landscape. Monthly transactions crossed the 1 billion mark in October 2019, processing 1,148.36 million transactions worth 1,91,359.94 crores.
The COVID-19 pandemic had a brief but noticeable impact on UPI usage. April 2020 saw a dip in transactions to 999.57 million due to the nationwide lockdown. However, the recovery was remarkably swift, and in August 2020, transaction volumes had not only recovered but surpassed pre-pandemic levels. This rapid bounce-back underscores the crucial role of digital payments during the pandemic and the resilience of the UPI system. Post-2020, UPI showed exponential growth. Monthly transaction volumes crossed the 2 billion mark in October 2020, 5 billion in March 2022, and a staggering 10 billion in August 2023. This sustained growth indicates that UPI has become deeply embedded in India’s payment infrastructure, transforming how millions of Indians conduct daily financial transactions. Interestingly, while both transaction volumes and values grew substantially, the average value per transaction decreased over the years, from around 3,000-4,000 rupees in the early days to about 1,500 rupees in recent months. This suggests that UPI has become ubiquitous for small, everyday transactions, truly achieving its goal of digitizing even the most minor financial interactions. The data also reveals some seasonality in UPI usage, with slight dips often observed in February (likely due to fewer days) and peaks around October-December, coinciding with India’s festival season and increased consumer spending.
In conclusion, the UPI statistics from 2016 to 2024 tell us an extraordinary story of digital financial transformation in India. UPI has shown unparalleled growth in adoption, usage, and institutional participation from a nascent system to the backbone of India’s digital payment ecosystem. This growth reflects the increasing digitalization of financial transactions in India. It underscores the success of this innovative payment system in promoting financial inclusion and reducing the economy’s dependence on cash. As UPI continues to evolve and grow, it is set to play an increasingly pivotal role in India’s journey towards a highly efficient, digital-first financial ecosystem, potentially serving as a model for other countries looking to modernize their payment systems.
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