Cars to tea stalls: UPI raids

Mumbai: As Indians feel more comfortable with the Unified Payment Interface (UPI), the account-to-account payment platform based on the local application, they are now using it to pay a 7-rupee cut-off chai or a 15 rupee bun. maska ​​As a result, the average ticket size of UPI Transactions have been halved from Rs 3,902 in FY17 to Rs 1,751 in FY20 to date.

While the ticket size is getting smaller, the frequency of use is increasing. This is reflected in monthly transactions, which were over 120 crore and worth Rs 1.89 lakh crore in November 2019. UPI 's digital payments, which enables account-to-account transfer without sharing any personal information, was first picked up by tech-savvy urban consumers to pay for app-based online services like Swiggy, Zomato, Amazon, Flipkart, Ola and Uber. They are now spreading to in-store payments and small businesses like chaiwallahs, panwallahs and autowallahs.

Given the low payments infrastructure cost, UPI is bridging the gap between organized retail and small merchants, which is resulting in shrinking of the average transaction size. The decline in average ticket size has been secular in FY20. From Rs 2,078 in May 2019, it dropped to Rs 1,942 in June, Rs 1,780 in July, and to Rs 1,552 in November.

NPCI said more people are using UPI to shop. While earlier transactions were largely peer-to-peer (P2P), the share of peer-to-merchant (P2M) payments has grown from 20% last year to above 35% this year. “Increasing share of P2M is shrinking the average transaction size. We see it as a positive, as transaction volumes are growing, ”said NPCI CEO Dilip Abse. I've added that the P2M transactions are on an average between Rs 450-700, while P2P transactions are largely above Rs 1,000. “P2M now forms 40% of our total transactions on UPI,” said Kotak Mahindra Bank chief digital officer Deepak Sharma.

Banks also said growth of P2M transactions is in rural areas where shops are acting as facilitators for bill payments. “In addition to individual customers in rural areas, we are seeing traction from kirana stores. How it works is - individual customers pay the kirana store owner in cash and he makes payments on their behalf via UPI to telecom companies, utility players and in some cases even e-commerce companies, ”said an SBI official.

“Up to 56% of our general traffic comes from cities of level 2 and -3. We are seeing traction not only for categories such as money transfer, top-ups, but also travel reservations, food delivery and purchases, ”said PhonePe CEO Sameer Nigam.

We in ICICI Bank , have seen the volume of UPI transactions triple in the quarter-ended September 2019 compared to the year-ago period,” said Bijith Bhaskar, head (digital channels & partnerships), ICICI Bank . “As consumers get more comfortable using UPI , they are making everyday payments like groceries, which were earlier being done in cash,” he added.