The unified payment interface, introduced in 2016, now makes up 10% of all retail payments, according to a Macquarie Research report.
"While the retail payments (by ) have delivered an 18% compounded annual growth rate over FY15-FY21, UPI has grown at CAGR of 400% over FY17-21 and now forms 10% of overall retail payments (excluding RTGS) from 2% seen couple of years ago," the report said.
Apart from UPI, immediate payment service or IMPS, the National Electronic Funds Transfer or NEFT and prepaid Instruments or mobile wallets are other platforms frequently used options. The RTGS or real time gross settlement is the backbone of the payment system but is mostly used for larger transfers and payments.
For its analysis, Macquarie defined retail payments as all payments excluding RTGS. While NEFT has been included, there may be a component of corporate transactions within that segment.
The of payments going via UPI in FY21 was at Rs 41 lakh crore — almost 2.8 times that of credit and debit card payments at point-of-sale terminals. It was nearly 20 times the of payments going through wallets or prepaid instruments, which make up less than 0.5% of overall retail payments.
Most payments going via UPI are still peer-to-peer transfers.
"While peer-to-merchant transactions form 45% of the total UPI transactions by volume, in terms they constitute just 19% with average ticket size of Rs700 for FY21," the report said.
The average ticket size in the peer-to-peer segment has been Rs 2,700 compared to credit card average transaction size of Rs3,600 at point-of-sale terminals. "We believe cards are generally used for transactions with higher ticket sizes as compared to UPI which is used to make small-ticket purchases."
While UPI payments had been gaining popularity for sometime, the pandemic added to the surge in use of the platform.
Average monthly transaction s have grown slightly more than four times since April 20. In July 2021, Rs 6.06 lakh crore in transactions went via UPI.
PhonePe and Google Pay constituted 86% and 80% of the market by and volume respectively in July 2021. "PayTM is a distant third with 8% market share by and 12% by volume."
Google Pay and Phonepe, however, will have to bring down their market share to less than 30% each, as per a directive by the National Payment Corporation of India. The new rules give existing platforms two years to meet the requirements.
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