World-beater in the making: India's UPI

India's popular unified payments interface (UPI) is emerging as a global powerhouse. UPI transactions have seen a significant surge since their inception during COVID.

In this article, we dive into the numbers and decode how UPI is now poised to overtake Visa in daily transaction volume.

India's popular and home-grown cutting-edge fintech, UPI, is fast becoming the top choice for digital retail payments. In terms of the value of transactions, UPI is already way ahead.

India's UPI surge nears a new milestone

The value of UPI transactions last month crossed 25 lakh crore rupees, 12 times that of all card transaction value. In terms of daily transaction volume, UPI is set to surpass that of global payments behemoth Visa soon.

That will make UPI the world's largest retail interbank payment settlement network. In terms of volumes, Visa does not share daily transaction details.

Still, looking at the figures available, UPI is fast closing in on transaction volumes through card networks.

On June 1 and 2, UPI reported 644 million and 650 million transactions, respectively. That is just above the visa's FY-24 global daily average of 639 million.

The number of daily transactions reported by UPI increased from 630 million in early May to about 650 million in just the first two days of June. UPI experiences a 5-7 per cent month-on-month rise and a 40 per cent yearly growth.

That is driven by an increase in internet penetration and more individuals embracing digital payments. Transactions processed by Visa are increasing at a rate of 10 per cent each year.

The current upward trend suggests that, over the next two or three months, UPI will have more daily average transactions than Visa.

The new milestone will make it even more remarkable because of the difference in the payment settlement methodology of card networks and the UPI.

UPI's payment settlement approach is real-time, while card networks like Visa and Mastercard use deferred settlement methodology. UPI facilitates almost 85 per cent of all digital payments in the country.

Not surprisingly, an RBI report showed India now accounts for nearly half of all real-time payment transactions.