India’s UPI most preferred for retail payments in 2023-24, RBI report says

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India’s Unified Payments Interface (UPI) has emerged as the most preferred method of retail payments, with a 79.6% share in total volumes of retail payments made in 2023-24, according to a Reserve Bank of India (RBI) report.

“The flagship UPI has revolutionised the retail payment experience for end users, making transactions faster and more convenient,” RBI’s report on currency and finance said. Retail payments are typically payments between consumers, businesses, and public authorities.

The UPI has seen a tenfold increase in volume over the past four years, increasing from 12.5 billion transactions in 2019-20 to 131 billion transactions in 2023-24, or 80% of all digital payment volumes, RBI said in the report. In June 2024, UPI recorded about 14 billion transactions, bolstered by 424 million unique users.

“India is leading the global digital revolution, emerging as a frontrunner on the back of its robust digital public infrastructure, rapidly evolving institutional arrangements, and a growing tech-savvy population,” RBI’s Governor Shaktikanta Das said.

“Globally, India ranks first in biometric-based identification (Aadhaar) and real-time payments volume; second in telecom subscribers; and third in terms of the startup ecosystem,” Das pointed out.

Simultaneously, credit card usage has increased over the years, accounting for 61% of the total volume and 76% of the total value of card payments in 2023-24, RBI’s report said.

The integration of UPI functionality with RuPay credit cards further increased credit card usage in 2023. As a result, the market share of outstanding RuPay credit cards in circulation also increased from 3% in 2022-23 to 10% in 2023-24, RBI’s report said.

RuPay, introduced in 2012 by the National Payments Corporation of India, was created to fulfill RBI’s vision of establishing a domestic, open, and multilateral system of payments.

UPI’s global expansion

The reach of India’s payment advancements has transcended national boundaries with the internationalization of the UPI.

“Emerging market economies (EMEs), in general, are leading the digital payments revolution as evident in the success of UPI of India, M-PESA of Kenya, PIX of Brazil, and PromptPay of Thailand,” RBI’s report said.

The internationalization of UPI was initially aimed at enabling Indian travelers to make merchant payments abroad using UPI. The next upgrade was the ability to make person-to-person remittances using UPI with the same efficiency experienced during domestic transactions.

“Going forward, the goal is to globalise the UPI such that every other country will have some fast payment system (FPS), either of its own or the UPI,” RBI’s report said.

“Such a network would ensure that all cross-border payments can happen on a FPS, which augurs well for global trade and payments. Central bank initiatives such as interlinkage of FPSs across economies and central bank digital currencies (CBDCs) are expected to support seamless international transactions, reduce foreign exchange risks and effectively manage global liquidity,” the report pointed out.

The report has been prepared by a team from the Department of Economic and Policy Research (DEPR), with input from several operational departments. It is supported by surveys of key stakeholders and data-based analysis, RBI Governor Shaktikanta Das said.

Digital economy

India has one of the largest digitally connected populations worldwide, according to RBI’s report. The two fundamental drivers of this wave of digitalization are ubiquitous connectivity through mobile, internet-connected devices and communication networks, as well as low-cost computing and data storage.

RBI’s report estimates that India’s digital economy currently accounts for a tenth of its GDP [gross domestic product] and is likely to constitute a fifth by 2026, considering the growth rates observed over the past decade.

Digital payments have recorded a compound annual growth rate (CAGR) of 50% and 10% in volume and value terms, respectively, in the last seven years, including 164 billion transactions in 2023-24. Payment infrastructure has also received a boost from the Payment Infrastructure Development Fund (PIDF), RBI’s report said. Under the PIDF scheme, the primary objective of the RBI is to increase the number of payment acceptance devices in the country.

“Digitalisation is driving growth in India’s services exports and lowering remittance costs. India’s digital journey is setting a benchmark for peer economies,” Das said.

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