After a strong start in 2024, the Unified Payments Interface (UPI) witnessed a slight dip in transactions during February, although the numbers remained higher than those in December 2023.

  • Also read: UPI transactions touch new record of ₹18.4-lakh crore in Jan

With transactions worth ₹18.28-lakh crore processed in February, there was a marginal 1% decrease from the peak of ₹18.41 lakh crore in January 2024. Despite this, the transaction value was 48% higher on a year-on-year basis, according to data provided by the National Payments Corporation of India (NPCI).

The number of transactions on the UPI network also declined by 0.8%, amounting to 1,210 crore transactions in February compared to 1,220 crore transactions in January. However, the volume of transactions showed a significant 61% increase year-on-year.

It is important to note that February typically experiences lower transaction volumes and amounts due to the fewer days in the month.

Factors Responsible for the Dip:

Several factors may have contributed to this decline, including technical breakdowns at multiple banks earlier in the month resulting in server downtime and failed UPI transactions. Additionally, the shorter duration of February could have had an impact on transaction volumes,” explained Akshay Mehrotra, Co-Founder and CEO of Fibe.

The year-on-year growth in UPI transactions has consistently exceeded 40% for transaction value and 50% for transaction volume in 2023 and the current fiscal year 2024. In the fiscal year 2023, the UPI platform processed 8,376 crore transactions, totaling ₹139-lakh crore.

A shift in consumer behavior towards digital transactions, enhanced convenience through value-added features, increased digital adoption by merchants using third-party payment applications, and a rise in P2M (person-to-merchant) transactions are driving the growth of UPI, as noted by market participants.

“While direct comparisons with January might not be entirely accurate due to the shorter duration of February, a more relevant metric would be transactions per day. February recorded 417 million transactions per day, higher than the 393 million transactions per day in January 2024. Given this growth trajectory, we maintain our previous estimate that UPI monthly transactions are likely to reach 20 billion by the end of fiscal year 2025,” stated Sunil Rongala, Senior Vice President, Head of Strategy, Innovation, and Analytics at Worldline India.

Projections indicate that UPI transactions could surpass 100 crore per day by fiscal year 2027, with PwC India’s report foreseeing UPI’s dominance in the retail digital payments arena, accounting for 90% of total transaction volumes over the next five years.