Upward trend in value and volume of UPI transactions followed the outbreak of the pandemic as people became more accustomed to the online payment mechanism, finance ministry says
Spending through credit cards and debit cards in April jumps 77.8 per cent and 12.5 per cent to Rs 1.05 lakh crore and 3.49 lakh crore, respectively. The increase in spending, together with rising UPI-based payments, indicate a pick-up in consumption as the pandemic-induced restrictions recede and uncertainty reduces, the finance ministry said on Monday.
“Value of UPI transactions processed through the National Payment Corporation of India (NPCI) stood at Rs 10.4 lakh crore during May 2022, the highest since UPI was launched in 2016, registering month-on-month growth of 5.9 per cent, while the volume of UPI transactions stood at 599 crore growing month-on-month at 7.4 per cent,” the ministry said in the Monthly Economic Report for May 2022.
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It added that the upward trend in value and volume of UPI transactions followed the outbreak of the pandemic as people became more accustomed to the online payment mechanism. Further, recent initiatives undertaken by the RBI such as the launch of UPI123Pay for 400 million feature phones (which allows all transactions to be processed without internet connections), UPI Lite (for processing low-value transactions) and UPI AutoPay have also helped NPCI in achieving record transactions and will further facilitate in achieving the target of processing a billion transactions a day on its platform.
UPI AutoPay allows customers to facilitate recurring e-mandate using any UPI application for recurring payments such as mobile bills, electricity bills, EMI payments, etc.
“This marks a permanent behavioural reset with the waning of the pandemic. Presently, UPI is linked through the debit card of customers to their savings accounts or current accounts. On June 8, 2022, RBI also allowed linking of UPI with credit cards to provide more avenues and convenience to the customers in making payments through UPI,” the report said.
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The RBI allowing credit cards to be linked with the unified payments interface (UPI) will enable more people to make payments using the popular platform. Currently, UPI facilitates transactions by linking savings or current accounts through users’ debit cards.
The finance ministry report said growth in industrial and services activity has led to rising consumption of power and fuel in the economy. Increasing summer heat has also contributed to an increase in power consumption while the release of pent-up consumption demand, particularly in respect of contact-based services, has added to an increase in fuel consumption. “Given the tight supply situation for domestically produced coal and high global energy prices, the import burden of the economy is becoming relentless as industrial and services activities increase in the economy.”
The report said that in advanced economies (AEs), liberal stabilisation policies therein have impacted the prices of the entire consumption basket. Whereas, in EMEs, imported inflation is in respect of only a few commodities on which these economies are net import-dependent. However, with time, imported inflation in EMEs (emerging market economies) may also spread to other commodities through interlinkages in the consumption basket making retail inflation therein more broad-based.
