The share of person-to-merchant (P2M) trades in UPI transactions has risen to 57.5 per cent in June 2023 from 40.3 per cent in January 2022, and is expected to keep growing, according to Worldline India’s Digital Payments Report for H1 2023.

During Jan-Jun, P2M transactions volume grew 119 per cent yoy to 2,915 crore and the value rose 72 per cent to ₹19-lakh crore. On the other hand, P2P transaction volume grew 22 per cent to 2,275 crore with the value of transactions rising 41 per cent to ₹64-lakh crore.

Average ticket size

“With the dominance of P2M transactions, UPI is going to become even more entrenched with the population and growth will continue at this rapid pace and the P2M percentage, at current trends, will likely reach 75 per cent of all UPI transactions by 2025,” the report said, adding that some part of the growth in P2M transactions can be attributed to zero transaction fees imposed on merchants.

The average ticket size of P2M transactions fell to ₹653 from ₹885 in January 2022. Overall, the ticket size for UPI transactions was down 10 per cent to ₹1,604, reflecting that UPI is now being increasingly used for micro transactions, it said.

In-Store merchant categories such as grocery stores, restaurants, service stations, clothing stores, government services, pharmacies and hospitals accounted for around 65 per cent of UPI transactions in terms of volume and nearly 50 per cent in terms of value. In the online space, e-commerce, gaming, utilities, government and financial services amounted to more than 80 per cent of the transaction volume and over 75 per cent of the transaction value. The number of UPI QR codes grew 79 per cent to 27.2 crore.

Credit vs debit cards

The report showed that 70.1 per cent of credit cards-in-force have been issued by private sector banks and 24.1 per cent by PSU banks, whereas 67.4 per cent of debit cards were issued by PSU banks and 22.6 per cent by private sector banks. The balance were issued by payment banks, small finance banks and foreign banks.

“The contrast between private sector banks dominating credit card issuance and public sector banks dominating debit card issuance is clear suggesting the risk appetite among the former is higher while the latter is focused on providing accounts to a larger section of the population including the unbanked,” the report said.

Volume of card transactions fell 8.9 per cent in Jan-Jun to 364 crore, driven primarily by debit cards and prepaid cards. Credit card transactions saw an increase of 19.6 per cent yoy whereas debit card transactions fell 28 per cent and prepaid card transactions by 9.2 per cent from the corresponding period of the previous year.

Value of card transactions rose 11.7 per cent to ₹11.35 lakh crore led by 30.5 per cent growth in credit card transaction value to ₹7.94 lakh crore. Debit cards transaction value fell 14.8 per cent to ₹3.17 lakh crore and prepaid cards by 32.8 per cent.