Introduction
In the era of digital transformation, India has emerged as a trailblazer with its revolutionary Unified Payments Interface (UPI). This groundbreaking digital payment system, launched in 2016 by the National Payments Corporation of India (NPCI), has not only reshaped the country's financial landscape but has also garnered global attention for its innovative approach to secure and seamless transactions.
India's UPI Journey
UPI's journey began with a pilot launch involving 21 member banks, spearheaded by Dr. Raghuram G Rajan, the then Governor of the Reserve Bank of India. The pivotal moment came on August 25, 2016, when these banks started uploading their UPI-enabled applications onto the Google Play Store, making the service accessible to the public. This move catapulted UPI's reach and usability, paving the way for its widespread adoption.
What sets UPI apart is its direct debit feature, where the amount is seamlessly deducted from the linked bank account, eliminating the need for intermediaries. Accessible through various platforms, including the official BHIM app and third-party apps like Google Pay, Amazon Pay, PhonePe, and BharatPe, UPI offers unparalleled convenience to users. Virtually all major banks operating in India support UPI payments, making it widely accessible across the nation. One of its most appealing aspects is its cost-effectiveness – unlike credit or debit card payments, UPI transactions typically incur no charges.
Remarkable Growth
UPI's growth has been nothing short of remarkable. In the financial year 2023-24, India witnessed approximately 131 billion UPI transactions amounting to a staggering ₹200 trillion, as announced by Finance Minister Nirmala Sitharaman while addressing the 'Viksit Bharat Ambassador' event at GITAM in Visakhapatnam. These figures represent a 57% rise in volume and a 44% rise in value compared to the previous financial year.
Union finance minister Nirmala Sitharaman
In March 2024 alone, UPI transactions experienced a 55% increase in volume to 13.44 billion and a 40% rise in value to ₹19.78 trillion compared to March 2023. Sitharaman highlighted the increasing adoption of digital payment technology, even in rural areas, emphasizing the transformative impact of UPI on the country's financial landscape.
Dominant Players
The UPI market is currently dominated by PhonePe and Google Pay, accounting for nearly 86% of transactions by volume, according to NPCI data. PhonePe holds a 48.3% market share, while Google Pay trails closely at 37.6%. The third-ranked player, Paytm Payments Bank, experienced a decline in market share following restrictions imposed by the Reserve Bank of India (RBI) in January.
Global Expansion
India's digital payment landscape, spearheaded by UPI, is rapidly gaining international attention as efforts intensify to facilitate smooth cross-border transactions. A growing list of countries, including Sri Lanka, Mauritius, France, UAE, Singapore, Bhutan, and Nepal, have officially embraced UPI payments, signifying a significant expansion in UPI's reach.
To utilize UPI payments outside India, users must first enable international payments within their respective apps. However, it's advisable to have alternative payment methods available when traveling abroad, as currently, only select locations and merchants are equipped to accept UPI payments. Moreover only a select few banks like Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India etc support international UPI payments.
Overcoming Skepticism
UPI's meteoric rise serves as a resounding response to the initial skepticism it faced. In 2017, Congress leader P. Chidambaram mocked Prime Minister Modi's vision of cashless payments, saying,
"Go to a Village fair and pay Rs 7.50 by credit card, what will the poor lady do? Does she have a POS machine there? Is it connected to an electricity source? Is wifi there? Is the internet working there?"
Chidambaram continued to challenge the notion of a cashless society, citing statistics,
"I give you the numbers…80 percent of all transactions in Germany are cash. You say that the world is going cashless…the world is not going cashless. The world is moving towards cash."
However, UPI's widespread adoption, even in remote regions, has proven Chidambaram's concerns unfounded, showcasing the government's commitment to inclusive financial empowerment.
Union Minister Rajeev Chandrashekhar recently took a dig at the Opposition's criticism of UPI, reminding them of how they once mocked PM Modi's vision of technology in governance, only to be exposed as "jokers" in light of UPI's unprecedented success.
Chandrashekhar stated, "This is a reminder how the UPA / I.N.D.I.A used to mock PM @narendramodiji's vision of technology in governance and now stand exposed as jokers. Moral of Story : Those who bet against PM's vision and his determination to transform India - will embarrass themselves n fail."
Global Admiration
UPI's unique features, including affordability, interoperability, scalability, and adaptability, have garnered global admiration. Ashish Chauhan, CEO of the National Stock Exchange of India (NSE), praised UPI's global appeal, stating,
Amit Nigam, Executive Director & COO of BANKIT, highlighted UPI's capabilities, saying,
"It is not only affordable, and interoperable but also scalable and adaptable, making it easy for other countries to embrace it. UPI is gaining popularity in other countries because of these capabilities."
Shikhar Aggarwal, Chairman of BLS E-Services, commended UPI for raising the bar for international payment systems by simplifying transactions and broadening access.
He stated, "It's no surprise that countries such as Japan, Singapore, the UAE, France, the UK, and more are keen to embrace the UPI model as they recognize its potential to reshape the future of payments on a global stage."
Mehul Mistry, Global Head - Strategy, Digital Financial Services & Partnerships at Wibmo, a PayU company, emphasized UPI's ability to connect over 300 banks and enable seamless financial transactions through third-party application providers.
He said, "UPI connects over 300 banks and enables seamless financial transactions through TPAP (third-party application providers) like Google Pay, Amazon Pay, PhonePe, and Paytm in partnership with banking providers."
Balaji Jagannathan, Co-Founder and Director of Paycorp.io, underscored UPI's role in safeguarding personal information by eliminating the need to disclose sensitive account details, providing an impregnable fortress against vulnerabilities and cyberattacks.
He commented, "In an era where safeguarding personal information is paramount, UPI emerges as the answer to this critical challenge. By eliminating the need to disclose sensitive account information, it provides an impregnable fortress against vulnerabilities and cyberattacks."
Conclusion
India's UPI has undoubtedly revolutionized the digital payments landscape, not only within the country but also on a global scale. Its user-friendly nature, security features, and cost-effectiveness have propelled it to the forefront of international payment systems. As more countries recognize UPI's undeniable benefits, it is poised to transform the global financial landscape, establishing new benchmarks for secure, convenient, and efficient financial transactions. India's achievement with UPI serves as a testament to its commitment to technological innovation and its vision for an inclusive and digitally empowered society.
Comments