The daily unified payments interface (UPI)-based transactions have crossed 700 million for the first time, touching 707 million, according to the latest National Payments Corporation of India (NPCI) data.
The feat was achieved on August 2. Over the past two years, the number of daily transactions has doubled, even though growth has slowed down in comparison to previous years.
In August 2023, UPI was registering around 350 million transactions a day, which increased to 500 million daily transactions in August 2024.
The government has set a goal of achieving 100 crore transactions per day for UPI, and the platform is projected to reach this target next year at the current growth rate.
The business model of UPI should reintroduce merchant discount rates (MDR) to attain a billion transactions by the next year, according to fintech companies and payment associations. They asked the government to establish a marginal MDR for major merchants and high-value transactions.
While the government reduced the subsidies for UPI from around Rs 4,500 crore in FY 24 to Rs 1,500 crore in FY 25, it refused to accept the MDR demand of the ecosystem. Recently, the Reserve Bank of India (RBI) also voiced support for the MDR demand of payment companies.
RBI Governor Sanjay Malhotra recently said the UPI interface should be made financially sustainable. The UPI system is currently free for users, with the government covering costs by subsidising banks and other stakeholders that support the payments infrastructure. “Costs will have to be paid. Someone will have to bear the cost,” he added.
The MDR – a fee charged to merchants by banks for processing digital payments, typically ranging from 1 per cent to 3 per cent of the transaction value – was waived off on RuPay debit cards and BHIM-UPI transactions by the government in December 2019. It is unclear whether MDR will be reintroduced or if users will also have to bear the cost of UPI infrastructure.
The RBI Governor’s comments come at a time when UPI surpassed global payments giant Visa in daily transaction volumes. During the last month, UPI recorded around 19.5 billion transactions worth over Rs 25 lakh crore. This translates into around 650 million transactions in a day on average and is worth around Rs 83,000 crore daily. UPI now powers around 85 per cent of all digital transactions in India and nearly 50 per cent of all real-time digital payments across the world.
As internet penetration increases and more consumers and businesses adopt digital payments, the platform experiences a 5-7 per cent monthly growth and an annual growth of about 40 per cent.
