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India’s UPI Far Advanced Than Similar System In Use In Developed Nations, Says Report

Did you know that India’s instant payment systems, such as the UPI and IMPS are, far more developed than similar systems in use in the US, the UK, Canada and Australia? Read below to find out more about it, and how exactly it has impacted India’s economy.

India’s UPI Far Advanced Than Similar System In Use In Developed Nations, Says Report
India’s UPI Far Advanced Than Similar System In Use In Developed Nations, Says Report

The Indian real-time payments market is well developed when directly compared with other markets like the US, the UK, Canada and Australia, according to a report published by ACI Worldwide.

The report titled ‘Prime Time For Real Time 2022’ says that India’s real-time payments include the Immediate Payment Service (IMPS) and Unified Payments Interface (UPI), both of which have seen increased usage in the last few years.

Click here to read more about UPI processing more than Rs 80 trillion worth of transactions in FY2022.

“India accounted for the largest number of real-time transactions in 2021 (48.6 billion). This figure was almost threefold that of the closest challenger, China (18 billion transactions in 2021) and almost seven times greater than the combined real-time payments volume of the world’s leading economies – the US, Canada, the UK, France and Germany (7.5 billion),” the report said.

Share Of Instant Payments
Real-time payments like UPI and IMPS formed 31.3% of the total payments in India for 2021.

“India is the poster child for real-time payments and a shining example of how a coordinated, collective, nationwide effort can unlock huge economic and social potential. India’s craving for cash may be plummeting, but there is still a great deal more to do. It is time to accelerate our efforts and expand this impact beyond the top-tier metropolitan areas, and replicate our success for the benefit of the entire country,” Ankur Saxena, Head of India and South Asia, ACI Worldwide said in a statement.

So, how did India achieve such great technological feat, and how exactly did it help the Indian economy? Read below to find out.

Indian Households And Businesses - 2021

According to the report, India recorded 48.6 billion real-time instant payment transactions, which is by far the highest number of transactions for any country.

This widespread adoption of real-time payments helped Indian businesses and consumers save approximately $12.6 billion in payment transaction cost, and also unlocked $16.4 billion or 0.56 per cent of the Indian gross domestic product (GDP) output.

“As a platform, the UPI has evolved a lot since it was introduced first in 2016. The consumer faith in instant payments like UPI increased due to several factors, and one of them can be attributed to the increased consumer awareness about the security of the network. Personally, I feel the fast real-time transaction speed and the minimal cost with which it is achieved with UPI, is way superior than any other country I experienced,” said Dewang Neralla, CEO, NTT DATA Payment Services India.

What Helped The Wider Acceptance of UPI?

The report further highlighted that the actual transaction volumes for UPI-based real-time instant Indian payments increased 22 per cent than their forecast estimated. At 48.6 billion transactions, UPI and IMPS represented 31.3 per cent of all the transactions in the country, the report said.

At 48.6 billion transactions, UPI and IMPS represented 31.3 per cent of all the transactions in the
At 48.6 billion transactions, UPI and IMPS represented 31.3 per cent of all the transactions in the country

“When I look at the global economic scenario, India has always thrived in coming up with better payment systems. In a world where digital real-time payments are given utmost priority, India has also excelled in accounting for the most significant number of worldwide real-time transactions performed in 2021,” says Edul Patel, CEO and co-founder of Mudrex, a Global Algorithm-based Crypto Investment Platform.

The report also listed the factors that led to the wider use of UPI and digital means of transactions.

  • Covid-19: The report noted that Covid-19 forced people to transact via digital means, and hence, as a result, the UPI’s demographic appeal further widened to now include a larger number of older people who were previously sceptical about using it. 
  • Much More Embedded: The report noted that UPI and IMPS is now more embedded into the Indian financial and banking ecosystem, courtesy the many different banking and finance applications using it. 
  • Newer Use Cases: Several newer use cases of UPI were enabled through technological innovations of the market participants, noted the report. QR code payments, card-less cash withdrawal using UPI, e-RUPI, UPI service rolling out in the United Arab Emirates and Singapore, and other such innovations.

Click here to read more about such UPI innovations like UPI lite.

Future Forecast

The report also forecast that the share of all transactions occurring via real time instrument was expected to increase to 70.7 per cent in 2026 from the present 31.3 per cent. The report predicted that in 2026, business and consumer level benefits due to India’s real time instant payment was expected to reach $92.4 billion, adding, that it will have an impact of $54.9 billion or 1.12 per cent in India’s GDP.

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