While demonetisation has resulted in a spike in digital payments, the authorities are readying a second version of the Unified Payment Interface (UPI) to increase the pace of adoption of digital payments, a report says.
The total digital transactions inched forward in the past year but the country's flagship payments platform UPI grew by a massive 700 percent in value.
UPI's monthly value, which crossed the Rs 1-trillion mark in December, recorded an eightfold growth over the previous year. The month's transaction volume surged to more than 600 million, four times the number of transactions year on year, according to the data the National Payments Corporation of India (NPCI) has released.
NPCI says that UPI 2.0 shall see incremental growth coming in through the mandate by Sebi for IPOs to move over to UPI in a phased manner. "Likewise the various other enhancements, features encompassed in the UPI 2.0 shall provide the ground for future growth," it says.
The payments industry saw a total increase of 27 percent in volume and a fall of 1 percent in value in November 2018, year on year, according to Reserve Bank of India (RBI) data. The forms of payment included were cards, mobile wallets and mobile banking. The data for these forms of payments were available only until November last year.
Card transaction surged 22 percent in volume and18 percent in value in November against the same month in the previous year. During the same period, wallets grew 86 percent in volume and 72 percent in value. UPI transactions grew 400 per cent in volume and 753 percent in value during the same period.
The UPI system, which was launched in August 2016 with 21 partner banks, has seen robust growth. The NPCI says UPI's success is because it is simple, seamless and secure, satisfying the needs of the consumers, merchants, banks and financial technology players.
"UPI was a game-changer in the true sense with complete interoperability being driven on the front end using a mobile phone, with reduced friction while on-boarding and secured two-factor authentication," the Business Standard said, quoting an NPCI email.
ICICI Bank's chief technology and digital officer B Madhivanan told that website that UPI had the underlying platform of IMPS, which was already a market leader and UPI has not affected the older platforms. UPI grew faster because it eased transactions by replacing account number and IFSC (Indian financial system code) with a UPI identity. "All the onus of making a transfer was on the sender before but UPI's Pull transaction feature put the onus on both sides," according to Madhivanan.