UPI Transaction Volume Sees 52% Growth in H1 2024 as P2M Transactions Surge

UPI Transaction Volume Sees 52% Growth in H1 2024 as P2M Transactions Surge

The Unified Payment Interface (UPI) saw a significant 52% year-on-year increase in transaction volume and a 40% rise in value during the first half of 2024, according to the India Digital Payments report – H1 2024 by Worldline. This growth was primarily fueled by a surge in person-to-merchant (P2M) transactions.

The report highlighted that P2M transaction volumes reached Rs 48.94 billion between January and June 2024, up from Rs 29.15 billion during the same period in 2023. In terms of value, P2M transactions registered a 62% increase. Ramesh Narasimhan, CEO of Worldline India, stated, “UPI remains the dominant player, with over 78 billion transactions in the first half of 2024 alone, which is a 52% increase in volume compared to H1 2023. This significant rise in UPI transactions, particularly in the P2M segment, further cements its position as the preferred method for micro-transactions, demonstrating long-term sustainability.”

The report underscored UPI's growing dominance in India's payment landscape, particularly for small-value transactions, and the trend is expected to continue growing. Sunil Rongala, Senior Vice-President of Strategy, Innovation, and Analytics at Worldline India, commented on the potential introduction of transaction fees, stating, "The reality is that UPI has become so ingrained that no substantial change will happen. Take credit or debit cards as examples; both have merchant discount rates (MDR), yet transactions continue to rise."

The average ticket size for UPI transactions fell from Rs 1,603 in the first half of 2023 to Rs 1,478 in the first half of 2024, while the average ticket size for P2M transactions decreased from Rs 667 to Rs 643 during the same period. The report also mentioned that the Reserve Bank of India’s recent decision to increase the transaction limits for UPI123 Pay and UPI Lite could further boost transaction numbers, particularly in UPI Lite.

In terms of market share, three UPI apps—PhonePe, Google Pay, and Paytm—dominate the sector, accounting for 94.83% of all UPI transaction volume by June 2024. This represents a slight dip from 95.68% in the previous year.

The report also noted that credit cards are increasingly being used for higher-value transactions. As of June 2024, the total number of cards in circulation stood at 1.45 billion, reflecting an 11% year-over-year increase. Credit card transactions rose by 32%, reaching 2.04 billion, while debit card transaction values fell by 18%, dropping to Rs 2.60 trillion from Rs 3.17 trillion in the same period last year.