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Consolidated progress chart of all payment instruments

Payments instruments in India

Aadhaar-enabled Payment System (AePS)

Note: The total includes Onus and Offus transactions, excluding uncategorized transactions.

Quarterly trends for the selected payment instrument

AePS, a crucial game-changer during COVID-19:

    • The use of AePS shot up, especially during the COVID-19 induced lockdowns, mainly since it served as a channel for people to avail direct benefit transfers (DBTs) and send...
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  • AePS: A beacon of success among new-age payments instruments

    • It played a critical role in providing financial services, especially for the customer segments that do not use digital platforms to avail them or lack usage of enabling devices like smartphones. These...
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  • The uptick seen in AePS transactions with the onset of the pandemic was not temporary. AePS transactions have grown ever since.

    • AePS clocked more than 3.4 billion transactions in Q1 CY 2021-22, witnessing a record-breaking 25% Q-o-Q growth. Emergency cash transfers initially aided this organic growth. However, the trend of high initial uptake...
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  • Prepaid Payment Instruments (PPIs)

    Quarterly trends for the selected payment instrument

    Indian consumers’ behavioral shift from m-wallets and prepaid cards to UPI resulting in PPIs’ steady growth:

    • As of Q1 CY 2022, PPIs have grown at more than 35% CAGR in the past five years, buoyed mostly by demonetization in H2 2016. This growth lasted CY 2019. However, since...
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  • The launch of e-RUPI may bring in a new wave of growth for PPIs:

    • The Prime Minister launched e-RUPI in August, 2021. This one-time payment mechanism will enable its users to redeem prepaid vouchers without a smartphone, card, digital payments app, or internet banking access. Users...
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  • The RBI revoking or canceling certifications of many players resulting in PPIs’ low transactions:

    • Since CY 2020, the RBI has canceled, revoked, or ceased the licenses of 13 PPI issuers for non-compliance with its provisions, with only five new PPI issuers joining the...
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  • Unified Payments Interface (UPI)

    Note : P2P and P2M bifurcation unavailable till March '20. We can assume
    that majority of the total transactions were P2P in nature.

    Quarterly trends for the selected payment instrument

    UPI outperforming all:

    • The Indian economy is in a stage of revival, and the country has almost surged back to normal. The COVID-19 pandemic led to a massive uptake of UPI among...
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  • Indian customers mostly use UPI for small ticket-size transactions:

    • An average transaction value of INR 1,800 (~USD 24) in Q1 CY 2021-22 indicates the rise in the number of users who prefer UPI for smaller ticket-size transactions, compared to that of...
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  • The ever-increasing participation from the banks to go live on UPI shows an optimistic future for this platform:

    • By the end of Q1 CY 2021-22, banks’ participation in UPI witnessed a Y-o-Y increase of 45% (314 banks were live on UPI at the time of writing) and catered to around...
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  • Credit card

    Quarterly trends for the selected payment instrument

    Credit card spending and issuance are on the rise:

  • Axis Bank became the largest issuer by the end of Q1 CY 2022, followed by HDFC, with many of them launching co-branded cards with e-commerce players:

  • RBI issued new rules on the issuance of credit cards to be effective from July 2022:

    • As per the notification, scheduled commercial banks (SCBs) and urban cooperative banks (UCBs) with a net worth of INR 1 billion and above can only issue credit cards. This also applies to...
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  • Debit card

    Quarterly trends for the selected payment instrument

    More than 1 billion cards were issued in India by CY 2021, with debit cards having a 94% share:

  • Public sector banks issue the maximum number of debit cards, with the growth led by RuPay cards:

    • The State Bank of India and Bank of Baroda remain the leading issuers of debit cards with them being at the forefront of PM Jan Dhan Yojana. Paytm Payments Bank emerged as...
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  • RBI issued new guidelines on the issuance of debit cards to be effective from July 2022

    • This includes options for Scheduled Commercial Banks to issue wearables or other forms of plastic debit cards as per the existing rules with several other regulations that focus on reducing risks with...
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  • Immediate Payment Service (IMPS)

    Quarterly trends for the selected payment instrument

    A recovery after the drop in IMPS transactions owing to migrants’ displacement:

    • The revival in the economy after the initial waves of the pandemic brought migrants, daily wagers, and workers back to the informal sector in urban and semi-urban areas in H2 2020. After...
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  • IMPS transactions hit by year-end pressure:

    • High-value IMPS transactions were hit on the last day of Q1 CY 2022 and the day after, as banks’ systems were offline due to year-end maintenance. In those two days, transaction volumes...
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  • RBI’s push to further fuel IMPS’ growth:

    • In Q4 CY 2021, RBI announced new policy measures for IMPS, including other online and offline payment modes. In one policy measure, the RBI proposed to increase the per-transaction...
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  • Bharat Bill Payment System (BBPS)

    Quarterly trends for the selected payment instrument

    BBPS is on a path of constant growth as it received a push from the regulators:

    • The transaction volume and value in Q1 CY 2022 show a Y-o-Y growth of 74% and 80%, respectively. Currently, the platform has 20,416 registered billers that have clocked ~196.5 million transactions in...
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  • With the launch of the Unified Presentment Management System (UPMS), customers have another reason to digitize their bill payments:

    • In Q1 CY 2022, NPCI announced the UPMS, which will automatically fetch bills from billers and enable customers to take action in terms of auto-debit and bill payment management....
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  • Increase in use-cases fuelling further growth:

    • An ever-increasing number of use-cases and payment categories like additional categories in utility bill payments, school fees payment, FASTag recharge, EMI payments, insurance premium payments, municipal tax payments, and...
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  • Cheque Truncation System (CTS)

    Quarterly trends for the selected payment instrument

    Cheques’ current performance below pre-COVID levels:

    • The transaction volume and value in Q1 CY 2022 fell by 27.8% and 11.8%, respectively, compared to pre-COVID levels (Q1 CY 2020). This fall is majorly a result of more customers shifting...
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  • Cheques are a primary an option for those who tend to make high-value payments:

    • Cheques provide their users the advantage of transacting in values more than INR 1 million, which is a limitation for most of the other commonly-used digital payment channels. Because of this, retail...
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  • RBI has tightened regulations under the CTS, which may further bring down cheques’ transaction metrics:

    • Earlier, banks could seamlessly process cheques with values less than INR 500,000 while having the option to reconfirm the cheque and payment details with the cheque issuer before processing the payment. Yet,...
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  • BHIM Aadhaar Pay (BAP)

    Quarterly trends for the selected payment instrument

    Despite being a unique product, BAP is yet to reach optimal performance

    • With an average monthly transaction volume of two million during Q1 CY 2022, BAP’s adoption was sub-par despite its strong use case that allows customers to pay micro-merchants across semi-urban and rural...
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  • BAP’s uptake was almost negligible compared to other payments instruments:

    • A lukewarm push from the banks, lack of evident demand from customers, non-compatibility of biometric scanners, and the initial capital expenditure required by merchants to facilitate biometric devices continued to slow BAP’s...
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  • Increase in the average ticket size of BAP transactions:

    • BAP transactions dropped by 2% in volume but increased by 10% in value in Q1 CY 2022 over Q4 CY 2021. The average value per transaction also increased to INR 3,160 (~USD...
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  • Cash

    Quarterly trends for the selected payment instrument

    Cardless cash withdrawal at ATMs to increase convenience for customers:

    • In May 2022, RBI announced the introduction of cardless cash withdrawals at ATMs using UPI. As this progresses, customers will be able to withdraw cash using their UPI IDs...
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  • RBI makes Aadhaar or PAN mandatory on cash deposits or withdrawals above INR 2 million:

    • The government has mandated customers to quote either the PAN or Aadhaar for depositing or withdrawing over INR 2 million in a financial year. Customers are also mandated to quote their PAN...
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  • Despite the uptick in digital payments, cash maintains its share in total transactions.

    • The end of CY 2021 saw the total value of transactions in cash rise to USD 41 billion as per RBI. However, it has largely remained stagnant over time, despite the rise...
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  • National Electronic Funds Transfer (NEFT)

    Quarterly trends for the selected payment instrument

    NEFT has been on a path of constant growth:

    • The transaction value in Q1 CY 2022 was at an all-time high of INR 84.12 trillion, while the transaction volume stood at 1.15 billion. With the ever-increasing credit appetite of Indians, more...
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  • MFIs and banks driving volumes:

    • Almost all microfinance institutions (MFIs) in India are now leveraging cashless modes to disburse loans to their customers. According to a KPMG report, 88% of loan disbursements in MFIs...
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  • The government’s move to introduce 96% of post offices to the core banking system will further aid NEFT’s growth:

  • *99# (USSD-based mobile banking service)

    Quarterly trends for the selected payment instrument

    Transactions via USSD fell as compared to its initial years:

    • The transaction volume and value in Q1 CY 2022 show a Q-o-Q decrease of 28.6% and 35%, respectively. The reduction in *99# (USSD) transaction volumes and values suggests its...
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  • Low profit margin for different stakeholders leading to further disinterest:

    • Running the USSD service incurs costs like SMS costs and payment service provider (PSP) fees, among others. Currently, telecom operators bear these costs. They are reluctant to further provide...
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  • UPI 123Pay can potentially replace USSD as a feature-phone-friendly payment system:

    • The core pillar of UPI 123Pay is based on an interactive voice response (IVR) model. This payment mode does not require any complex interaction from the users’ side. Instead, it permits users...
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  • National Automated Clearing House (NACH)

    Quarterly trends for the selected payment instrument

    NACH is on a path of constant growth:

    • The transaction volume and value in Q1 CY 2022 show a Y-o-Y growth of 23.7% and 19.4%, respectively. Both the volume of recurring payments and the number of service providers have increased...
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  • Lenders and other FSPs playing a crucial role in NACH’s growth:

    • NACH makes it easier for FSPs to collect payments from their customers. This has led to increased adoption of NACH by FSPs like banks or microfinance institutions (MFIs) to collect loan repayments...
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  • RBI increasing the mandated limit for NACH transactions may result in a higher value of transactions:

    • According to the latest RBI Monetary Policy Committee report, it plans to increase the NACH mandate limit for the Trade Receivables Discounting System (TReDS) settlements from its current value at INR 10...
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  • Compare the progress of different payments instruments

    • AePS

    • PPIs

    • UPI

    • Credit Card Image

      Credit Card

    • Debit Card

    • IMPS

    • BBPS

    • CTS

    • BAP

    • Cash

    • NEFT

    • *99#

    • NACH

    Drag any payment instrument from the carousel and drop it inside any of the three windows to compare

    Drag any payment instrument from the carousel and drop it inside any of the three windows to compare

    Drag any payment instrument from the carousel and drop it inside any of the three windows to compare

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