The National Payments Corporation of India’s (NPCI) Unified Payment Interface (UPI) clocked 6.28 billion transactions in July, the highest since its launch in 2016. UPI was developed under the Digital India initiative and is the government’s instant real-time payment system that facilitates inter-bank transactions.
NPCI is an umbrella organisation for operating retail payments and settlement systems owned by the country’s central bank, the Reserve Bank of India (RBI). According to data from NPCI, the 6.28 billion transactions totalled IN 10.62 trillion (around US$ 135 billion). Month-on-month, the volume of transactions was up 7.16% and the value increased by 4.76%. Year-on-year (YoY), the volume of transactions nearly doubled while the value of transactions was up 75%.
The Indian Prime Minister, Narendra Modi, lauded the milestone and, in a response to a tweet by the Finance Minister, Nirmala Sitharaman, he said, “This is an outstanding accomplishment. It indicates the collective resolve of the people of India to embrace new technologies and make the economy cleaner. Digital payments were particularly helpful during the COVID-19 pandemic.”
Following COVID-19 regulations, several merchants and stores stopped cash payments. To ensure all citizens could use digital payment methods, last December, RBI announced it would launch UPI-based digital payment solutions for feature phones, eliminating the need for an Internet connection. Before the project, only smartphone users were able to use UPI services for payments. India has around 1.2 billion mobile users, of which only 740 million have smartphones. The UPI service for feature phones, which lack the advanced functionalities of smartphones, is expected to benefit a large number of consumers.
In March, the Ministry of Electronics and Information and Technology claimed that the number of digital payments increased by 33% year-on-year during the financial year (FY) 2021-2022. It said that hat approximately 74.22 billion digital payment transactions were recorded during this period, up from 55.5 billion transactions registered in FY 2020-21. UPI was the most used platform for digital transactions during the period, accounting for 4.52 billion transactions with a value of IN₹8.27 trillion (US$108 billion), until the end of February.
In January, RBI issued a statement regarding its new Framework for Facilitating Small Value Digital Payments in Offline Mode, which allows offline digital payments up to IN₹ 200 (US$2.65) per transaction, subject to an overall limit of IN₹ 2,000 (US$26.9). The move is an attempt to boost digital payment penetration in rural and semi-urban areas. An offline digital payment means a transaction that does not require internet or telecom connectivity.
Under the offline mode, payments can be carried out face-to-face (proximity mode) using any channel or instrument like cards, wallets, and mobile devices. These transactions will not require an additional factor of authentication (AFA). Since the transactions are offline, the customer will receive alerts through SMS and/or e-mail. The issuer shall send the transaction alerts to users when the transaction details are received.
