UPI continues to be the ubiquitous payment choice, outstripping other payment options with transaction volume increasing 56% in the second half of 2023 to 65.77 billion from 42.09 billion in H2 2022. During the same time frame, the value of transactions increased by 44% from Rs 69.36. trillion to Rs 99.68 trillion.
According to the latest report by Wordline Digital Payments, the interesting number continues to be the average ticket size (ATS), which reduced by 8% from Rs 1648 in H2 2022 to Rs1515 in H2 2023.
The ATS continues to be in a secular downward trend suggesting a deeper embedding of UPI – it is used for smaller or micro transactions and this decline is mainly driven by the growth of person-to-merchant (P2M) transactions compared to person-to-person (P2P) transactions.
According to the data collected by Wordline, P2P transactions grew from 20.25 billion transactions in H2 2022 to 27.04 billion in H2 2023 witnessing a 34% increase. During the same period, the value of P2P transactions grew from Rs 53.69 trillion to Rs74.24, a 38% increase.
In the same time frame, P2M transaction volume grew from 21.84 billion to 38.73 billion registering a staggering 77% increase while the value grew from Rs 15.66 trillion to Rs 25.43 billion, a 62% increase.
It is clear that the reduction in total ATS was caused by P2M transactions as the average ticket size of all UPI transactions decreased by 8% in H2 2023 although for P2P transactions, it grew by 4%.
During the same period, the ATS of P2M transactions fell from Rs 720 to Rs 656, a 9% reduction.
This is a good trend as the future of UPI will be P2M transactions and indicates the rise of microtransactions indicating a growing willingness to use UPI.the report stated.
Best UPI apps, Remitter and Beneficiary Banks
The top three UPI apps that dominate in terms of volume and value continue to be PhonePe, Google Pay and Paytm. In terms of transaction volume, in December 2023, the 3 applications accounted for 95.4% of all transactions compared to 94.8% in the previous year period.
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In terms of transaction value, the 3 accounted for 93% in December 2023 compared to 92.2% in December 2022. The dominance is likely a mix of early mover advantage as well as ease of use and features/discounts/offers offered on the apps, Worldline suggested.
The top 5 remittance banks in December 2023 were – State Bank of India (SBI), HDFC Bank, Bank of Baroda (BoB), Union Bank of India (UBI) and Punjab National Bank (PNB).
While the top 5 beneficiary banks were- Paytm Payments Bank, Yes Bank, SBI, Axis Bank and ICICI Bank.
Paytm rides on the rails of Paytm Payments Bank while the other 2 use the rails of other banks. It should be noted that the data is for H2 2023 and therefore before the RBI action on Paytm Payments Bank.