Launched in 2016, the Unified Payments Interface (UPI) has emerged as the most popular digital payment method, transforming person-to-person and person-to-merchant transactions, in India. The popularity of the payment method can be determined by the transaction volume data revealed by the Reserve Bank of India. According to the central bank, UPI transaction volumes have crossed 360 million per day, representing a growth of 50% compared to the 240 million transactions reported in February 2022.
The payment system is handling more than 10 billion transactions every month since December 2022. This speaks volumes about the robustness of the digital payments infrastructure, and as a result, many nations have shown keen interest in replicating the success achieved by India. To further accelerate the growth of the industry, the Reserve Bank has asked banks and non-banking financial institutions to promote digital payment methods.
With UPI facilitating seamless person-to-person and person-to-merchant transactions in India, the Reserve Bank has been also considering the use of the payment system to facilitate cross-border payments. Consequently, in February 2023, India and Singapore completed the linkage of their respective real-time payment systems, including UPI and PayNow.
After Singapore, PayNXT360 expects the Reserve Bank of India to further link the UPI payment system with the real-time payment system of more countries such as Indonesia and the United Arab Emirates. These strategic collaborations are expected to further accelerate the growth and prominence of UPI in the global digital payment ecosystem.
Alongside cross-border UPI payment capabilities, such as the one offered by UPI – PayNow linkage, prepaid payment instrument providers are also launching features to allow international UPI payments.
PhonePe is seeking to diversify its service and product offerings to build customer loyalty. These funding rounds are part of the firm’s strategy to push its presence into different business verticals. From the short to medium-term perspective, PhonePe is expected to expand into the lending and insurance segment as well, thereby enabling the firm to keep driving revenue growth amid the growing competitive landscape in the Indian prepaid card industry.
With a robust digital payments infrastructure and the growing presence of leading financial services firms in the digital payments space, the prepaid card market in India is projected to grow significantly over the next five years. The entry of new players in the segment will also drive innovation in the sector. For instance,
From the short to medium-term perspective, PayNXT360 expects more such strategic collaborations in the Indian market. These partnerships, through product innovation, will keep aiding the growth of the digital payments market.
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