Every ₹1 increase in value of UPI (unified payments interface) transactions is leading to 18 paisa decline in debit card transactions, indicating a person is now making a visit to ATM on an average 8 times a year, down from 16 visits earlier, according to State Bank of India’s economic research report “Ecowrap”.

The aforementioned observation is on the basis of monthly time series data analysis for the period of April 2016 to April 2023.

Cash withdrawal

Research by SBI’s economic research department (ERD) found that cash withdrawal through debit cards at ATMs has declined from November 2018, ceding way to UPI.

“UPI has not only altered the payment landscape of India but is also significantly altering the purpose for which currency is used hitherto acting as investment to speculation (trading) conduit,” said Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.

ERD’s research suggests that rural and semi-urban areas are now accounting for 60 per cent of share in UPI value/ volume, dismantling the popular perception that metro/urban areas are hotbeds of digital payment adoption and innovations.

Top 15 States accounted for about 90 per cent of share in value/volume.

Among all, UPI has emerged the most popular and preferred payment mode in India pioneering Person to Person (P2P) as well as Person to Merchant (P2M) transactions in India accounting for about 73 per cent of the total digital payments, per Ecowrap.

ERD’s analysis shows that the volume of UPI transactions has increased multi-fold from 1.8 crore in FY17 to 8,375 crore in FY23. The value of UPI transactions has also increased handsomely, from just ₹6,947 crore to ₹ 139-lakh crore during the same period, a jump of 2004 times.

“Interestingly, CIC (currency in circulation) has moderated to reach 12.4 per cent of GDP in FY23, almost same level as 2015-16. The yearly growth in CIC has also declined to 7.9 per cent in FY23 from 16.6 per cent in FY21,” ERD said.