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UPI is set to become the de-facto mode of payment both for P2P (person to person) & P2M (person to merchant) transactions. At Cashfree, we’ve always believed UPI to be a transformative force in the Indian payments ecosystem and were quick to jump on to the UPI bandwagon.

Presently, Cashfree offers the most extensive of UPI integration options among payment companies.
Its been close to 2 years Cashfree offering UPI; we took a look at UPIs adoption within Cashfree and outside, as a preferred payment method.

What we found!

UPI registered 40.5 Crore transactions in Sep 2018. This is more than the number of NEFT and IMPS transactions put together (31.5 Crore), more than the number of credit card transactions and roughly equal to the number of debit card transactions. Within 30 months of launch, UPI went past transaction modes that have been around for almost a decade or longer.

While precise data is unavailable, almost all of this growth has been P2P transactions on popular UPI Apps — Google Pay, PhonePe,  BHIM and PayTM — which account for >90% share of UPI payments. The average ticket size of the payments, at around Rs 1800, is much lesser than NEFT or IMPS.

UPI has thus created a new market of small value P2P transactions — people are paying each other more often since it is easier to pay now.

How does UPI growth look like in the online P2M payments segment?

NPCI and RBI data combines both P2P as well as P2M — offline & online — numbers. While UPI has seen spectacular adoption as a P2P payment method, it is designed to be a very convenient way to pay for online purchases and to pay to businesses — both for the payee merchant and the customer. 

UPI v/s Net banking v/s Cards (debit & credit) as an online P2M payment mode

UPI Net Banking Cards
For customers Payment information needed for checkout UPI ID – simple like email
4 digit MPIN
Bank Login
Bank Password
16 digit card number
Card expiry
Cardholder name
Mobile friendly design High – Mobile first design Low Low
For businesses Settlement to business account 1 Day 1-2 Days 1 Day
Success Rates 70-95%* 70%-90% 70%-95%

UPI payments on Cashfree

We looked into our payment gateway data to check UPI adoption among payments at Cashfree’s 5000+ customers, compared to existing modes like Cards and Net Banking. Since it is exclusively based on Cashfree data, this comparison may not be an exact reflection of UPI as an online P2M payment mode, but still a close approximation due to the size of the sample set.

Transactions via different payment modes on Cashfree (in %)

What we found

    • UPI which accounted for 3.2% of transactions last year in Nov, grew to 16.8% of the total transactions in 12 months. While relatively less spectacular compared to P2P, it is still very strong growth. UPI is now the second most popular payment mode on Cashfree by the number of transactions ahead of net banking and credit cards.
  • Looking at the graph indicates users from net banking are shifting to UPI, especially of late. The share of card transactions has remained steady.

Expectedly, there is a correlation between P2P transactions and P2M transaction share. We can expect P2M transactions to take off like P2P transactions at some point.

With UPI 2.0 features like:

    • Ability to link overdraft (OD) account with UPI app(earlier only fixed and savings account could be linked to the app)
    • Ability of users to check the merchant’s credentials using a QR code

It is expected that UPI will be seeing higher adoption as a payment mode.

Depending on your business requirement and the kind of checkout experience that you want to offer, you can opt for the appropriate mode of UPI integration.

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