Mumbai,  September 28, 2023: Digital payments leader  has released its India Digital Payments Report for H1 2023 (January to June 2023) which captures a series of noteworthy trends and shifts within the digital payments landscape. The report reveals UPI as a huge success and expect it to continue dominate payments in India.
The number of UPI transactions in January 2018 which was 151 million has reached 9.3 billion in June 2023, primarily driven by the growth in Person-to-Merchant (P2M) transactions. In January 2022, P2M transactions accounted for 40.3% of all UPI transactions compared to 57.5% in June 2023 and this percentage is likely expected to keep growing.
Says Ramesh Narasimhan, Chief Executive Officer - India, Worldline:“Every passing month serves as a testament to the rapid adoption of digital payments. Looking back at the first half of 2023, I find myself even more optimistic about the payment trends unfolding in India; the impressive performance of UPI, the surge in credit card usage, the jump in mobile payments volume, and the uptick in small ticket size of P2M transactions. All this indicates that broad swathes of the country, rural and urban, are embracing digital payments.
The report reveals that in H1 2023, frequently visited In-Store merchant categories such as grocery stores, restaurants, service stations, clothing stores, government services, pharmacies and hospitals accounted for around 65% in terms of volume and nearly 50% of the total transaction value. While in the online space, e-commerce, gaming, utilities, government and financial services amounted to more than 80% of the total transaction volume and contributed to more than 75% of the total transaction value.Top 10 states and UT with the highest number of transactions at physical touch points in 2022 for Worldline India were Maharashtra, Kerala, Tamil Nadu, Karnataka, Delhi, Telangana, Uttar Pradesh, Gujarat, Andhra Pradesh and West Bengal
Payments Acceptance Infrastructure
Payments acceptance infrastructure channels saw a surge between January 2022 and June 2023. PoS terminals grew by 44% to 8.09 million while BQRs grew by 21% to 5.69. The standout is UPI QRs which grew by 79% (already on a large base) to 272 million. The growth in PoS terminals has also been helped by the RBI’s PIDF scheme while UPI QR growth has been driven by the private companies dominating UPI acceptance. This growth in UPI QRs is also reflected in the growth in UPI transactions as well as how it has had an impact on other forms of payment.
UPI
UPI continues to be the dominant payment channel in India dwarfing other payment options. UPI transaction volume has experienced a major upswing increasing from 4.6 billion transactions in January 2022 to 9.3 billion in June 2023. Correspondingly, the transaction value has exhibited a parallel upward trajectory. It increased from INR 8.3 trillion in January 2022 to nearly doubling to an impressive 14.7 trillion in June 2023. A key driver for this growth has been the near-ubiquitous acceptance of UPI for both personal and payment transactions from the user/buyer standpoint as well as a high acceptance by merchants. Also, there has been greater penetration of UPI in rural India.
P2P and P2M Transactions: UPI transactions consist of person-to-person (P2P) and person-to-merchant (P2M) transactions. While both have clocked good growth numbers, the P2M transactions growth is truly impressive. P2P transactions grew from 18.62 billion transactions in H1’22 to 22.75 billion in H1’23; a 22% increase. During the same period, the value of P2P transactions grew from INR 45.52 trillion to INR 63.99, a 41% increase. By contrast, during the same period, P2M transactions volume grew from 13.33 billion to 29.15 billion, a 119% increase while the value grew from INR 11.6 trillion to INR 19.18 trillion, a 72% increase. During the same period, P2M transactions grew from 41% of all UPI transactions to 56%.
While some of this growth in P2M transactions can be attributed to zero transaction fees imposed on merchants, it indicates the depth of acceptance of this payment mechanism from both buyers and particularly the sellers; beyond low fees, merchants are also looking for security, timely payments among other things and UPI delivers here. The other fact is that with the dominance of P2M transactions, UPI is going to become even more entrenched with the population and growth will continue at this rapid pace and the P2M percentage, at current trends, will likely reach 75% of all UPI transactions by 2025.
Top UPI apps, Remitter and Beneficiary banks: Three UPI apps are dominant in terms of volume and value; PhonePe, Google Pay, and Paytm. In terms of transaction volume, in June 2023, the 3 apps accounted for 95.68% of all transactions compared to 94.55% a year before. In terms of transaction value, the 3 accounted for 93.65% in June 2023 compared to 93.38% in June 2022. The dominance is likely a mixture of early mover advantage as well as features offered in the apps. The top 5 remitter and beneficiary banks are being driven by PhonePe and Google Pay; Paytm rides on its own bank rails while the other 2 use the rails of other banks
 Credit, Debit and Prepaid cards
The total number of cards in circulation has shown a modest growth over the last 18 months. In June 2023, the total number of cards was 1376 billion, a 9% YoY increase. In June 2023, the number of credit cards was 88.68 million, 975.8 million debit cards and 312.1 prepaid cards; this corresponds to a YoY growth of 13%, 6% and 18% respectively. The top 5 issuers of credit cards are HDFC, SBI, ICICI, Axis and Kotak respectively and the top 5 issuers of debit cards are SBI, Bank of Baroda, Canara Bank, HDFC and Bank of India.
The contrast between private sector banks dominating credit card issuance and public sector banks dominating debit card issuance is clear suggesting the risk appetite among the former is higher while the latter is focused on providing accounts to a larger section of the population including the unbanked. For credit cards, 70.1% were issued by private sector banks and 24.1% by public sector banks while 67.4% of debit cards were issued by public sector banks and 22.6% by private sector banks. The balance was issued by payment banks, small finance banks and foreign banks.
Mobile Payments
Mobile payments, which are transactions done using mobile phone apps, have seen solid growth. A significant number of these transactions are UPI-based but could be a whole host of payments using bank accounts etc. The number of mobile transactions in H1’23 was 52.15 billion compared to 33.55 billion in H1’22, a 55.4% while the value of mobile transactions in H1’23 was INR 132 trillion compared to INR 95.32 trillion in H1’22, a 38.9% increase. Another comparison shows the real growth; between January 2022 and June 2023, the volume was up 77% while the value was up 58%.
Net Banking
While Net Banking (NB) is traditionally thought of to be where one pays for their goods and services, it also includes payments made by corporates for taxes among many other things explaining the very high numbers. In H1’23, the volume of NB transactions was 2.13 billion, a 1.4% increase from H1’22 (2.10 billion). In terms of value, NB transactions in H1’23 amounted to INR 468.8 trillion compared to INR 442.4 trillion, a 5.9% increase.
In terms of ATS, it was a massive INR 219974 in H1’23 compared to INR 210495 a year before. NB, given its usage, will continue its upward trajectory but the percentage growth will be small just given the massive base.
Electronic Toll Collection
Electronic Toll Collection (ETC) has really changed how we pay for tolls on the country’s roads and now increasingly at parking plazas among other use cases. Drivers across the country can testify how easier it has made driving on roads and this steady adoption is reflected in the numbers. To start with, the number of tags issued has grown from 45.97 million in January 2022 to 71.92 million in June 2023, a 56.5% growth. In terms of volume, transaction in H1’23 were 1.85 billion compared to 1.57 billion in H1’22, a 17.6% growth while the value of ETC transactions in H1’23 was INR 303.4 billion, a 25.3% increase when compared to H1’22 (INR 242.2 billion).
Given that ETC tags are a mandate, this number will continue to grow steadily and as new use cases come online, that steady increase may take on a steeper incline.