Autos to tea stalls: UPI makes inroads

MUMBAI: As Indians get more comfortable with unified payment interface (UPI) — the home grown app-based accountto-account payments platform — they are now using it to pay for a Rs 7-cutting chai or a Rs 15-bun-maska. As a result, the average ticket size of UPI transactions has more than halved from Rs 3,902 in FY17 to Rs 1,751 in FY20 till date.

While the ticket size is getting smaller the frequency of use is increasing. This is reflected in monthly transactions, which were over 120 crore and worth Rs 1.89 lakh crore in November 2019. UPI’s digital payments, which enables account-to-account transfer without sharing any personal information, was first picked up by tech-savvy urban consumers to pay for app-based online services like Swiggy, Zomato, Amazon, Flipkart, Ola and Uber. They are now spreading to in-store payments and small businesses like chaiwallahs, panwallahs and autowallahs.

Given the low payment infrastructure cost, UPI is bridging the gap between organised retail and small merchants, which is resulting in shrinking of the average transaction size. The decline in average ticket size has been secular in FY20. From Rs 2,078 in May 2019, it dropped to Rs 1,942 in June, Rs 1,780 in July, and to Rs 1,552 in November.

NPCI said more people are using UPI to shop. While earlier transactions were largely peer-to-peer (P2P), the share of peer-to-merchant (P2M) payments has grown from 20% last year to above 35% this year. “Increasing share of P2M is shrinking the average transaction size. We see it as a positive, as transaction volumes are growing,” said NPCI CEO Dilip Abse. He added that the P2M transactions are on an average between Rs 450-700, while P2P transactions are largely above Rs 1,000.

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