UPI payments hit new high, tops Rs 5 lakh crore transaction value in March

FY21 witnessed an unprecedented rise in the popularity of contactless payments, propelled by the outbreak of coronavirus. Many switched to digital wallets from cash transactions – not just for convenience but for safety too. This led to momentous gains for United Payments Interface (UPI) – India’s biggest digital payments bet – which crossed Rs 5,04,886 crore in value in March 2021.

With 2.73 billion transactions in March, up 20% sequentially, UPI closed FY21 on a high note. On a year-on-year basis, the platform doubled the numbers from 1.25 billion transactions recorded in March 2020.

According to National Payments Corporation of India (NPCI), UPI transactions worth Rs 4,25,062 crore were recorded in February, while the volume stood at 2.29 billion. A decline of 1-3% was witnessed between November 2020 and February 2021.

Transaction failures due to technical glitched in the banking system could be one of the primary reasons for UPI’s growth stagnation.

On the back of UPI’s popularity, the market share of third party apps like Google Pay, Paytm and PhonePe has also increased. However, NPCI has issued new guidelines to put a cap on their market share.

“UPI transactions on third party payment apps cannot exceed 30% of the overall volume of transactions processed in UPI during the preceding three months,” an official statement from NPCI read.

The 30% rule is applicable from January 1, 2021 but existing third party players like Google Pay and PhonePe – who own more than 40% stake in UPI – have been given time till next year to comply with the rule. However, NPCI said exemptions to certain players could be made based their justifications.