UPI, also known as the “Wallet Killer”, has been a game changer for the Indian payment space by revolutionizing the way people think about money today.
With the growing popularity of digital payments, people are changing the way they transact, many choosing Unified Payments Interface (UPI) over other instruments.
The result can be seen with the booming growth of UPI between March 2018 and March 2019, with monthly transaction volume growing from a mere 4.5 times to 799.54 million over the year.
The Battle Between UPI and Cards-
UPI has been steadily stealing market share from cards as well as Net Banking. UPI has beaten both debit and credit cards in India with its aggregate value of transactions remaining higher in the first three months of 2019.
The decrease in the penetration of credit card can already be seen as the cost of a credit card issued by a bank is quite high and mobile-unfriendly compared to UPI where the transactions are instant and mobile friendly.
The problem for card giants further increases with many companies such as Whatsapp Payment, Paytm, PhonePe, Google Pay joining the list of digital payment solutions and providing options to pay through debit and credit card saved on its platform.
In January 2019, the value of UPI transactions stood at Rs 1.09 lakh crore, higher compared to that of `1.05 lakh crore worth of transactions recorded by the cards. The numbers in February were `1.07 lakh crore for UPI and `93,998 crores for cards.
What Sets UPI Apart From Other Instruments
This newfound popularity of UPI is likely to begin trouble in paradise for giants like Visa and Mastercard as their market share is being eroded by a new competitor.
- UPI has been cleverly designed to prevent any one player from having a monopoly in the payment.
- UPI payments are interoperable,that means it allows a PhonePe user to transfer money to Paytm user using UPI.
- With Google Pay soon launching micro-credit via overdraft policy introduced in UPI 2.0, It could become more than just payment mode and could replace your credit cards very soon.
- UPI apps provide their users with attractive incentives like discounts, scratchcards, and cashbacks, and users refer their friends and family members to use these apps.
- It is easy to game incentives in P2P payments. As a result, P2M payments are a better reflection of UPI usage trends because there is an intent to purchase something along with the payment.
Our Prediction
Many analysts are betting that 80% of transactions made by card presently will move to UPI. Moreover, there is seen a decline in the number of ATMs which will result in a rapid boost in mobile banking.
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