UPI Stands for Unified Payments Interface and it is a real-time payments system made especially for India by the NPCI- National payments Corporation of India. This payments system is regulated by the Reserve Bank of India and third-party app providers can also use the interface for payment transactions.
Soon after the demonetisation led by the Indian government, online payment systems and services boomed and since then, online financial transactions in India have increased by the day with deeply penetrable market depth. According to a recent report by YourStory, Unified Payments Interface (UPI) has clocked a 105% growth in online financial transactions from December 2019 to December 2020.
The digitisation wave that has struck India boomed during the COVID-19 pandemic where everyone was forced shut in their houses. With an overall increase in the digital market, the e-commerce sector and other online services, digital payments services in India have experienced an upward graph.
UPI service in India is the flagship service for Digital India after Aadhar. According to the report, the total value of UPI transactions on the platform by the end of December 2019 was recorded to be at INR 2,02,520.76 crore and by the end of December 2020, this value rose to INR 4,16,176.21 crore. These figures were retrieved directly from the National Payments Corporation of India (NPCI).
Analysts strongly suggest that the credit for this up-rise of the UPI Platform goes to the COVID-19 induced lockdowns where most people were opting for online payments by using digital services, be it shopping online from e-commerce platforms, online food delivery through Swiggy or Zomato or payment of salary for employees among several other reasons.
The UPI platform has been crossing the 2 billion mark in terms of transaction volumes almost every month after October 2020 when it first touched the figure, according to a report by YourStory.
The platform is working great for the Indian financial ecosystem and there have been speculations by several sources that the government is planning to take the service international to developing countries. The ease of low-cost financial transactions that UPI provides is phenomenal and could be a game changer for many developing countries out there.
Recently in November 2020, the NPCI instilled a 30% cap on total transaction volume on UPI for third-party providers such as Paytm, Google Pay, PhonePe and WhatsApp Pay. This policy change came with a relief that if the specified cap percentage is exceeded by the third-party providers, they would then have a period of 2 years from January 2021, to comply with the policy in a phased manner.