QR Code Usage via UPI Shows 91.5% Increase to 657.9 Million, Credit Card Adoption Comes to a Halt in Growth
UPI QR codes Shine in India's Digital Payment Landscape
India's financial year 2024-25 has seen a phenomenal leap in the adoption of UPI QR codes, recording a staggering 91.5% increase over the previous year, according to recent RBI data. With a whopping 657.9 million UPI QR code transactions, this payment method has become the go-to choice for digital payments in the country.
This meteoric rise in UPI QR codes usage coincides with a slowdown in credit card transactions, whose year-on-year growth rate has dropped to 7.94%, and debit card additions, which registered a modest 2.7% growth to 991 million.
The boom in UPI QR codes can be traced back to the excessive deployment of this technology by digital payment giants like Google Pay, Paytm, and PhonePe. The number of banks joining the UPI platform continues to grow, touching 668 in April, fuelling speculation of an increase in UPI-based transactions' value[1].
March 2024 witnessed a whopping Rs 24.77 lakh crore in UPI transactions, marking a 25% increase in value and a 36% surge in volume compared to the previous year. UPI's dominance in digital payments is undeniable, as nearly four out of five digital payments in India were conducted via UPI in the financial year 2024, based on the Reserve Bank of India's annual report[1].
UPI's dominance has risen steadily, from 73.4% in FY23 to 79.7% in FY24. A significant improvement from its FY20 share of 36.8% as compared to the volume of total digital payments in the country.
The RBI is proactively supporting digital payments through initiatives like the "Har Payment Digital" campaign, which aims to educate every Indian person about digital payments[1]. Furthermore, the RBI permits adjusting transaction limits for UPI in-person merchant payments, catering to user needs while maintaining safeguards, thereby enhancing the convenience factor[1].
Several factors contribute to the remarkable growth of UPI QR codes in India, from FY20 to FY24.
- Government Support and Policy: The Indian government, through initiatives like the Digital India mission, has actively promoted digital payments, encouraging banks and startups to invest in digital payment infrastructure[1].
- Technological Innovation: Improvements in mobile and internet accessibility have empowered more people to use digital payment systems. UPI's simple interface and the convenience of using QR codes for transactions have contributed significantly to its popularity[1].
- Increased Merchant Adoption: As UPI gained traction, more merchants began accepting UPI QR codes, creating a positive feedback loop of adoption and usage. This wider acceptance encouraged more users to adopt UPI for daily transactions.
- Economic Factors and Pandemic Impact: The COVID-19 pandemic accentuated the switch to digital payments due to social distancing measures and a preference for contactless transactions. This unique situation further propelled the use of UPI and UPI QR codes as a preferred method of payment.
- Competitive Market and Innovation: The competitive digital payment market in India, comprising giants like Paytm, Google Pay, PhonePe, and others, fostered innovation and investment in UPI QR code technology. This competition resulted in better user experiences and wider adoption.
In the financial year 2024-25, digital payment giant Paytm, among others, has contributed to the increased usage of UPI QR codes, as indicated by the 657.9 million transactions recorded. The adoption of UPI QR codes has outpaced traditional methods like credit card and debit card transactions, with a 91.5% increase over the previous year. As we approach 2024, technology advancements in finance, such as UPI technology, are expected to continue flourishing in India's digital payment landscape.
