UPI volumes decline m-o-m for first time since launch

Payment volumes on the Unified Payments Interface (UPI) fell on a month-on-month (m-o-m) basis in May in what is a first for the payment channel. Data released by the National Payments Corporation of India on Friday showed the number of UPI transactions dropped marginally to 189.48 million in May from 190.08 million in April. The value of transactions continued to grow, rising 23% m-o-m to Rs 33,288.51 crore. A plateauing in UPI volumes had become evident from the under 7% growth it recorded between April and May as a slew of new payment providers joining the platform have now reduced to a trickle.

This is in contrast to the 35-150% m-o-m growth UPI volumes were seeing in the latter half of 2017 when Google India introduced its Tez app for UPI, followed by homegrown fintech player Paytm joining the UPI ecosystem. Since its launch in August 2016, UPI has seen two waves of exponential growth — one in early 2017 following the launch of the Bharat Interface for Money (BHIM) app and another with Google Tez and Paytm entering the UPI ecosystem in September and November 2017, respectively.

What can drive a likely next round of growth in UPI volumes would be the full-fledged launch of payments for all WhatsApp users. In February, investment bank Credit Suisse said in a report that the entry of WhatsApp into the UPI ecosystem could lead to some shake-up. “WhatsApp, with 230 million daily average users, is by far the most popular app in India and as it soon plans to integrate a payments button, digital payments are set to explode and we estimate a $1 trillion market over the next five years,” it said.

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NPCI is yet to release data on the share of transactions made using its Bharat Interface for Money (BHIM) app in the overall UPI data for May. In April, the volume of transactions made using BHIM had risen 5.4% m-o-m to 12.6 million, while their value had increased 3% to Rs 4,972.69 crore. In April, BHIM’s share in UPI transactions stood at 6.7%, unchanged from the previous month, even as cashbacks were packed into the app for users during the month.