Unified Payments Interface or UPI continues its sharp recovery as a payment mode with more than 1.34 billion transactions reported by the National Payments Corporation of India (NPCI) in June. It has managed to surpass February’s 1.32 billion transactions and jumped 30 percent from April, during the peak of the lockdown, when it had recorded less than a billion transactions.
In terms of the total amount of money transferred, June saw Rs 2.6 lakh crore being transacted through UPI as compared to Rs 1.5 lakh crore in April. This is the highest ever, even in pre COVID-19 times. The highest amount transferred in a month through UPI was in February, just shy of Rs 2.2 lakh crore.
UPI continues to be an exception rather than the norm when it comes to digital payments, because the rate of recovery has been much slower in other forms of payments. IMPS or Immediate Payment System, another NPCI run payment mode, has just recorded 198 million transactions, 19 percent lower than February when it reported 247 million transactions. IMPS is usually used by bank customers to transfer money to other bank accounts through net banking or mobile banking services.
UPI is still primarily used for person to person fund transfers, with apps like Google Pay, PhonePe and Paytm leading the race. Bankers told Moneycontrol that merchant transaction share on UPI continues to be around 40 percent.
Another payment mode which has shown a quick recovery is FASTag, or digital toll payments on highways. As of June, the total number of transactions through FASTag stood at almost 82 million. While this is still 25 percent lower from February, when it clocked 110 million transactions, it has jumped 50 percent from 55 million in May. This shows that vehicular traffic has restarted on national highways, indicating some degree of revival in the economy.
The rural economy is seeing massive cash withdrawals of the direct benefit transfer funds that the government has sent to below the poverty line families. These transactions are routed through Aadhaar Enabled Payment System or AePS. Through this payment mode, beneficiaries can cash out funds from their bank accounts through biometric authentication. As per numbers shared by NPCI for June, 397 million transactions were recorded. This number is slightly lower than the 405 million recorded in May and 403 million in April.