Debit Cards, NEFT Take Backseat As India Shifts Towards Cashless Trend With UPI
Unified Payment Interface (UPI) transactions grew by 46 per cent year on year (YoY) in November. In contrast, national electronic fund transfer (NEFT) increased by less than half that pace at 17.5 per cent, while debit card transactions contracted by 6.6 per cent YoY in October, according to recent data from the Reserve Bank of India (RBI).
In terms of value, the debit card transactions are just a third of the amount settled through UPI during the month. In value terms, Rs 17 lakh was settled through UPI in November.
Besides widespread usage in financially sound urban centres, UPI usage is now getting pace in semi-urban and rural areas.
“It's heartening to see that retail consumer goods stores have bounced back. Covid had impacted this segment and many of the small shop owners had lost a lot of business. This segment has grown by 168 per cent from last year. Apart from retail shops, there is apparel, restaurants and the fuel segment growing YoY,” said Nayantara Bhargava, Chief Business Officer, Mswipe Technologies.
In addition to individual retail transactions, UPI is emerging to be a choice for e-commerce transactions replacing relatively older modes platforms such as NEFT and even debit cards, say market players.
A report by PayNearby said that UPI transactions increased 118 per cent and 106 per cent in volume and value, respectively, at semi-urban and rural stores, indicating that there is growing adoption of UPI beyond Tier II regions in the country.
The RBI is also adding payment aggregators to the list of eligible platforms and also enhancing UPI transaction limits.
Those included the enhancement of UPI transaction limits for payments to educational institutions and hospitals to Rs 5 lakh per transaction from Rs 1 lakh earlier and higher limits for e-mandates for recurring online payments without any additional factor of authentication (AFA) for insurance premiums, mutual fund subscriptions and credit card payments.
