UPI transactions decline in second Covid-19 wave

Despite more and more people resorting to digital payments to avoid physical contacts during the pandemic, there was a decline in the UPI (Unified Payments Interface) transactions in the country in April and May compared to the previous months, the time window when the second savage wave of infection reached its heights deeply impacting consumer sentiments and restricting expenditure.

Transactions in terms of both volume and value dropped in April-May, 2021 as compared with the fourth quarter of FY21.

NPCI data
According to the data released by National Payments Corporation of India (NPCI), UPI transactions dipped markedly in April. Compared to March, the number of transactions dipped in April – from 273.16 crore to 264.10 crore. In other words, the drop was by 3.31%.

In value terms the drop between March and April was by 2.22%.

NCPI data show the total number of transactions done through UPI in May was 253.96 crore. The total volume of these transactions was Rs 4,90,638.65 crore.

On the other hand, the number of transactions in April stood at 264.10 crore involving a cumulative volume of Rs 493,663.67 crore.

The drop from April to March in the number of transactions was 3.83%. The drop in volume in May compared to April was 0.61%.

Jan-March data
UPI transactions rose during the pandemic and in February 2021, transactions on the UPI platform recorded a small decline for the first time since April 2020, the first month of lockdown in the country.

February recorded 229.29 crore transactions against 230.27 crore in January.

The value of transactions through UPI also decreased from Rs 4,31,181.89 crore in January to Rs 425,062.76 in February – a decline of 1.42%.

However, after witnessing a brief decline, UPI transactions registered a massive 19% month-on-month growth in March compared to February. The volume and value of transactions stood at 2,73.17 crore and Rs 5,04,886.44 crore respectively in March.

Reduction in discretionary expenditure
Stung by the reduction in income, consumers switched to the save mode. With a number of jobs gone and wages slashed, the disposable income at the hands of the consumer has gone down and there is a marked propensity to save for the rainy day.

With medical exigencies hanging on the head like the proverbial sword of Damocles, the average consumer has been more eager to save than spend, economists and investment experts have said alike.

The reduction in discretionary expenditure has been reflected in the decline in number of transactions as well as the cumulative value of the transactions.

PhonePe commands largest market share 
About a dozen apps that provide the UPI feature, including PhonePe, Paytm, BHIM app, MobiKwik, Google Tez, Chillr, Paytm Payments Bank, SBI Pay, iMobile and BOB UPI.

PhonePe had the largest marketshare. In May it recorded 114.98 crore transactions out of a total of 253.95 crore, which gave it a market share of 45.27%.

In value terms, PhonePe accounted for 47.71% of the market – Rs 234,123.57 crore out of the total market of Rs 490,638.65 crore.