UPI Autopay is the rising star on the digital payment horizon

While Unified Payments Interface (UPI) has been storming the payment popularity chart over the past few years, there seems to be a new star on the horizon – UPI Autopay – that is accounting for more and more low-value recurring transactions in the country as the year is drawing to a close, The Economic Times has reported.

Designed to take the headache of repeated but small payments off the common man, UPI AutoPay carries the mandate of National Payments Corporation of India (NPCI) as a subset of the UPI payment mode. Some of the expenditure typically channelised through this feature is paying for newspaper bills, cable TV subscriptions and sundry regular payments.

Repaying loans is one substantive flow of funds that UPI can handle with the autopay mode becoming more and more popular.

The banks that account for most of the autopay transactions are the country’s lending behemoth State Bank of India (SBI) and the two biggest private sector names HDFC Bank and ICICI Bank. Two other banks are the Bank of Baroda and Paytm Payments Bank. These five entities cumulatively accounted for 8.1 million transactions in November 2023. Significantly, this number is more than double of that of 3.9 million recorded a year earlier. Four of the same banks were among the top five in 2022 too.

This year only in the month of November, SBI remitted 3.8 million UPI AutoPay transactions. This is not only double its own number a year ago but also nearly the entire autopay transactions in the country in November 2022.

All major payment applications such as Google Pay, PhonePe and Paytm are processing UPI AutoPay instructions.
The success rates of these payments are also rising. In November 2022, SBI recorded 91% approval rates which HDFC Bank reported about 94%. But now almost all major banks are reporting 99% plus success rates.

After tasting initial success, NPCI has shot off a letter to banks and fintechs on December 14 to raise limits for AutoPay transactions according to the Reserve Bank of India recommendations.
RBI has raised the payment limit that can be processed without authentication from Rs 15,000 earlier to Rs 1 lakh now.

“As of now mutual fund payments, insurance premium payments and credit card bills are allowed, eventually more categories could get added,” the founder of a payment startup which is included the UPI family told the newspaper.
Industry veterans are of the opinion that in order to make payments smooth and hassle-free NPCI has the long-term goal of raising the size of transactions in the universe of recurring payments.

Incidentally, till November 2023, UPI has handled 105 billion transactions involving a value of Rs 164 lakh crore. UPI is now used by millions of consumers which access their savings accounts, credit cards, credit line from banks and even prepaid cards.