According to bankers, the surge in transactions is a reflection of increasing adoption as well the rise in economic activity in December following the sharp drop in second wave cases.
UPI transactions had hit a record in October driven by festival season purchases and online sales by e-commerce companies. However, after the festival peak, there was a marginal dip in November. December marks a 9% in the number of transactions and a 7.6% increase in value. Compared to transactions in December 2020, the use of UPI in December 2021 has doubled both in value and volume.
In calendar 2021, there were 3800 crore UPI transactions amounting to Rs 73 lakh crore. The National Payments Corporation of India, which runs the UPI platform, expects the volume to hit one billion a day when the Reserve Bank of India operationalises the use of UPI wallet for low-value offline transactions. This will enable payments to be made without putting pressure on the core banking system of banks.
UPI transactions were already the predominant mode of electronic payments in the country and are now outdoing the number of card transactions by nearly eight times. Unlike credit cards which are for merchant payments only, the UPI numbers reflect both the increase in peer to peer transfers as well as merchant payments.
As UPI is an account-to-account transfer mechanism, bankers say that they will have to relook their core banking architecture to handle such a large volume of transactions daily. On the evening of December 31st, there were record transactions on UPI due to customer payments on food ordering apps.