UPI transactions in January set new record, BHIM transactions fall to 9-month low

Even as the volume and value of Unified Payments Interface (UPI) transactions continued to scale new heights, transaction volumes of National Payments Corporation of India’s (NPCI's) flagship app, Bharat Interface for Money (BHIM), fell to their lowest in nine months. (UPI is a real-time payments system developed by NPCI that enables digital transactions between banks.)

In January, UPI set a new record in the number of deals, registering 672.7 million transactions worth Rs 1.09 trillion, data from NPCI showed. The January numbers marked an 8.47% increase in transaction volume from the previous month which recorded 620 million deals valued at Rs 1.02 trillion. December clocked over 600 million UPI transactions – the first month to do so. UPI transaction volume and value have been steadily growing. November registered 525 million transactions valued at Rs 82,232 crore and October clocked 482 million transactions worth Rs 74,978 crore.

Currently, 129 banks are live on UPI besides 48 third-party apps including Google Pay, PhonePe, Amazon Pay, Mobikwik, Uber and Swiggy.

However, transaction volumes of BHIM app dropped for the third straight month in January. From 18.3 million transactions worth Rs 8,206 crore in October 2018, the numbers fell to 17.3 million (Rs 7,982 crore) in November, 17 million in December (Rs 7,589.2 crore) and a nine-month low of 13.4 million (Rs 6,202.5 crore) in January. The app clocked 38.8 million downloads on Android and 1.93 million downloads on iOS as of 3 January 2019. There are 128 banks live on BHIM app currently.

UPI is finding increasing popularity among digital companies.

According to a recent report by The Economic Times, the payments arm of Amazon India has started testing its native UPI handle with a closed user group. While Amazon allows payments to be made via UPI, it does not have its own handle. It can issue its own handle via a proprietary virtual payment address (VPA), for which it needs to partner with a bank. According to The Economic Times, Amazon is working with Axis Bank to develop this product.

The development comes against the backdrop of the Reserve Bank of India's directive, issued in April 2018, asking global payments firms to store local user data in the country. The apex banking body gave the firms six months to comply with the directive.

In October, the RBI refused to extend the deadline for companies to adhere to this directive.

Not just Amazon but several global majors such as Facebook-owned WhatsApp and iPhone maker Apple were affected by this move.

While Apple has shelved its plans for a UPI-based payments service, WhatsApp has delayed its scheme to commercially roll out its payments service, which is currently in beta. However, WhatsApp has built a system to store payments-related data locally in India.

Though the global payments players are yet to have their own UPI handles, various banks and homegrown payments firms already have them. Digital payments platform MobiKwik and Paytm offer their users the option of creating their own virtual payment addresses (VPAs) with @paytm and @ikwik, respectively, instead of using @upi.