UPI Payment – Making Sense Of The Biggest Disruption To Hit The Industry

upi payment

In the past 14 months, the UPI initiative backed by the current government has hogged the limelight.  As the UPI juggernaut has gained steam, major players from across the world have jumped on the bandwagon including Google with Tez, Facebook with its UPI payment facility within WhatsApp. Home grown players are not far in the race, with both PhonePe and PayTM fighting for supremacy with a bunch of other UPI apps in the market.

There has been much talk about how UPI payment is changing the P2P (Person to Person) payments space. It is also giving wallets a tough fight in the light of KYC regulations, that recently led to a lot of users discontinuing wallet usage. But how has UPI payment caught up in the P2M (Person to Merchant) space which is the lion share of transactions. It really determines how sticky long term usage will become, as UPI aims to become the payment instrument for doing commerce across the country.

At PayU, being the leading payment gateway provider in the country, we looked through our data and deciphered how the UPI journey was progressing. PayU enabled UPI payment across all its merchant offerings in August 2017. PayU is also on track to double its monthly transaction volume to roughly $2.5 billion in its core business by March 2019. Our data brought up diverse insights:

With A Variety Of Players In The Market Offering UPI Payment Services, How Do They Stack Up? 

upi payment stack up

It’s interesting to see that BHIM has maintained a steady position while Tez and PhonePe emerge as the dominant private players. 

Some other key insights are:

  • The three predominant players in UPI are – PhonePe, Tez and BHIM.
  • PayTM has a low but steady market share of UPI while Tez has massively increased its market share over time.
  • ICICI is 4th amongst UPI apps and with WhatsApp making its UPI ID public the share for ICICI could grow even further in coming months.
  • With Increased competition from private players BHIM is losing its market share consistently.
  • Others majorly comprise of handles created on Banking Apps such as Axis, Kotak, SBI etc.

UPI Payment Growth In Average Transaction Size

What is more interesting to note is how the average transaction size has emerged across the months. Most players had lucrative cashback offers to customers to incentivize using UPI payment. This is how the numbers stack up:

upi payment growth size

While it is interesting to note is that the ASV trend mirrors that of debit cards. The numbers hold and see an increasing trend rivaling wallets and credit card transactions. Thus, signaling widespread usage of UPI payment for actual use cases showing that, it has picked up organically apart from the growth provided by offers doled out by various players. Continuing the thread of:

How Wallets Have Fared With The Onset Of UPI Payment?

upi payment upi vs wallet

The share of wallets is continuously eroding to UPI 

How does UPI payment usage split across the sectors and how does it compare to other payment modes?

upi payment sector dominance

Figure 1: UPI GMV Across Segments 

E-commerce is the dominant segment, while professional and technical services is the second biggest segment. How does this compare to wallets which are losing to UPI and to Debit cards whose transaction behavior they so closely mimic.

upi payment

Figure 2: Wallet GMV Across Segments 

upi payment debit card

Figure 3: Debit Card GMV Across Segments 

As per the PayU Insights, here are the key takeaways of the article: 

  • PhonePe, Tez and BHIM are the dominant UPI payment players
  • UPI experienced 188% growth witnessed in past 6 months v/s 41% of wallets, credit/debit cards
  • E-commerce sector dominates with 72% UPI payment GMV followed by technical services and education

upi payment infographic

In this piece of research, it is evident that in the coming months UPI payment is all set ready to take the country by a storm!

Have a glance at the excerpts of this article covered by leading Indian news dailies.

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    upi payment    upi payment   upi payment upi payment 

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Recommended Reads 

How To Accept Payments Using UPI Payment Gateway? 

Author: Ajay Sethi

Business Insights & Strategy, PayU