Worldline Report: UPI’s Dominance and P2M Surge Define India’s Digital Payments Landscape

Global payment services provider Worldline has unveiled its India Digital Payments Report for H1 2023 (January to June 2023), shedding light on significant trends within India’s digital payments landscape. The report highlights the continued dominance of UPI (Unified Payments Interface) and its potential for future growth.

Key findings from the report include the remarkable growth of UPI transactions, particularly Person-to-Merchant (P2M) transactions. In June 2023, UPI transactions reached a staggering 9.3 billion, up from 151 million in January 2018. P2M transactions accounted for 57.5% of all UPI transactions in June 2023, compared to 40.3% in January 2022. This shift towards P2M transactions is further evidenced by the decreasing average ticket size (ATS), which fell from INR 885 in January 2022 to INR 653 in June 2023, indicating a rise in microtransactions through UPI.

Ramesh Narasimhan, CEO – India, Worldline, expressed optimism about India’s payment trends, citing the impressive performance of UPI, increased credit card usage, growing mobile payment volumes, and smaller P2M transaction sizes. Narasimhan emphasized that digital payments are gaining traction in both urban and rural areas, becoming an indispensable part of daily life.

Worldline India Insights

The report highlighted the significance of frequently visited in-store merchant categories, accounting for around 65% of transaction volume and nearly 50% of the total transaction value. In contrast, online transactions were dominated by e-commerce, gaming, utilities, government, and financial services, contributing to more than 80% of transaction volume and over 75% of transaction value.

UPI Continues to Dominate

UPI remains the leading payment channel in India, with transaction volume surging from 4.6 billion in January 2022 to 9.3 billion in June 2023. The transaction value also nearly doubled, increasing from INR 8.3 trillion to INR 14.7 trillion during the same period. UPI’s widespread acceptance for personal and payment transactions has fueled this growth, with increased penetration in rural India.

Comparing H1’23 to H1’22, UPI transactions witnessed a 62% volume increase and a 47% value increase. Notably, the average ticket size (ATS) decreased by 10%, driven by the growth in P2M transactions.

P2P and P2M Transactions Surge

Both P2P and P2M transactions within the UPI ecosystem experienced substantial growth. P2P transactions grew by 22%, reaching 22.75 billion in H1’23, while P2M transactions saw a remarkable 119% increase to 29.15 billion. The value of P2P transactions increased by 41%, while P2M transactions’ value surged by 72%. P2M transactions accounted for 56% of all UPI transactions in H1’23, indicating strong acceptance among sellers. This trend is expected to continue, with P2M transactions potentially reaching 75% of all UPI transactions by 2025.

Credit, Debit, and Prepaid Cards

Credit card issuance is dominated by private sector banks, while public sector banks dominate debit card issuance, reflecting differences in risk appetite and market focus. Despite an increase in the number of cards in circulation, card transactions saw a decline in H1’23. Debit card transactions dropped by 28%, prepaid card transactions decreased by 9.2%, while credit card transactions increased by 19.6%.

Mobile Payments Surge

Mobile payments, including UPI-based transactions, witnessed significant growth, with a 55.4% increase in transaction volume and a 38.9% increase in transaction value between January 2022 and June 2023. The average ticket size (ATS) of mobile app transactions decreased by 10.6%, highlighting Indians’ increasing reliance on mobile phones for various payments.

Net Banking and Electronic Toll Collection (ETC)

Net Banking transactions experienced a modest 1.4% increase in volume and a 5.9% increase in value in H1’23. Electronic Toll Collection (ETC) tags issued grew by 56.5%, reflecting the convenience and widespread adoption of ETC for road tolls and parking. This trend is expected to continue, driven by new use cases.