RBI Annual Report : UPI transactions overtake debit card payments in 2018-19

According to the Reserve Bank of India's annual report, the number of transactions via real-time payments system aka the Unified Payments Interface (UPI), were 1.2 times higher than the number of debit card transactions in 2018-19,

Nearly 5.35 billion UPI-based transactions recorded in FY19, as compared to 4.41 billion debit card payments

This is first year wherein, UPI-based transactions overtook debit card payments, indicating a definite shift in consumers' preferences as far as digital payments are concerned. In addition to UPI and debit cards, there are other options available to consumers such as National Electronic Fund Transfer (NEFT), e-wallets and internet banking are some other popular e-payment options.

During 2018-19, the number of card payment transactions carried out through credit cards and debit cards was 1.8 billion and 4.4 billion, respectively.

The number of point of sale (POS) terminals, which are essential infrastructure for UPI (and card payment) transactions have increased by 21% to 3.72 million at the end of March 2019, from 3.08 million at the end of March 2018. However, the number of ATMs witnessed a decline from 222,247 to 221,703," the annual report said.

In a boost to the government’s digital payment plan, the banking regulator said it will make online payment system NEFT available 24x7 from December 2019.

To make UPI transaction even more popular, The National Payments Corporation of India (NPCI) has rationalized merchant discount rates  (MDR0 for BHIM UPI. 

Merchant discount rates (MDR) for large ticket transactions has been capped at a maximum of Rs 100 and made zero at offline merchants for transactions up to Rs 100. Presently, this is capped at 0.25 per cent for transactions up to Rs 2,000 and at 0.65 per cent for transactions above Rs 2,000. 

Further, MDR for offline merchant where transactions are done through QR Scan and Pay will be zero for transaction up to Rs 100. The new MDR rates will come into effect from October 1, 2019, the statement said.

MDR is paid by a merchant to a bank for accepting payments from customers through credit or debit cards.

These changes will motivate more and more merchant to start accepting payment thru BHIM UPI which will make this payment option even more popular in days to come.

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