The ease of using Unified Payments Interface (UPI) platforms is increasingly attracting both merchants and consumers, reducing the reliance on debit cards for cashless transactions, as per a report by the Economic Times.
While new point-of-sale (PoS) terminals are still being introduced to accommodate all payment methods and the growing use of credit cards, the report says that there is a noticeable shift towards QR code-based UPI transactions.
As per data obtained from the Reserve Bank of India, new point of sale deployment free at the slowest pace since demonetisation in fiscal 2023-24, says the report. The sole notable exception to this rule occurred in 2021–2022, when Covid-19 and the ensuing lockdowns severely harmed offline commerce.
The deployment of new PoS terminals increased by 14 per cent between March 2023 and 2024, or 8.9 million, roughly half the rate of 28 per cent and 29 per cent in the two years prior. The period from 2016 to 2017 saw the fastest rise in recent memory, with new deployment rising by 82 per cent as a direct result of demonetisation, adds the report.
Interestingly, in the last two years, there was a surge in the deployment of QR codes for UPI payments via platforms such as Google Pay, Paytm and PhonePe, adds the report. The RBI data shows that in March there were 346 million QR codes while it was 172 million in the same month in 2022.
Nearly 160 million debit card transactions were made at merchant locations in March, down 32 per cent from 237 million the same month last year, according to transaction statistics from the RBI. Meanwhile, UPI merchant transactions rose from 4.82 billion to 8.30 billion, a 72 per cent increase.
Though UPI transactions with no fees are boosting the country's digital payments ecosystem, they are adversely affecting banks by reducing revenue from the payments business due to decreased debit card usage, says the report.
However, the decline in debit card swipes has been somewhat offset by the rapid increase in credit card usage. Currently, over 100 million credit cards are issued in India, nearly doubling in number over the past three years.
