UPI crosses 25-billion transactions for first time in Oct despite MDR debate; daily value tops Rs 1 lakh crore

MUMBAI: UPI transactions crossed the 25-billion mark for the first time in October, while average daily transaction value breached Rs 1 lakh crore for the first time, signalling continued growth in digital payments despite the debate over the introduction of merchant discount rate (MDR) charges.UPI processed 25.47 billion transactions worth Rs 31.53 lakh crore in October, compared with 24.07 billion transactions valued at Rs 29.37 lakh crore in September. Transaction volumes rose 5.8% month on month, while the value of payments increased 7.4%.The increase was also reflected in daily averages. Average daily transactions rose 2.5% to 822 million in October from 802 million in September, while average daily transaction value increased 3.9% to Rs 1,01,707 crore from Rs 97,913 crore. On a year-on-year basis, transaction volumes grew 23% in October, matching September's growth rate. However, value growth moderated to 16% from 18% in September."The festive season drove this rise. Navratri and the big online sales fell in October, and people used UPI for bigger festive purchases along with their everyday payments. From April to August, the number of UPI payments kept rising, but their daily value stayed flat and the average payment kept getting smaller. In September and October, the value of payments grew faster than their number, and the average payment size went up for two months in a row," said Reeju Datta, cofounder Cashfree. "Last year, Dhanteras and Diwali fell in October, so most of the big festive buying happened in that month. This year, both fall in November. This is the main reason the value of payments grew 16% over last October, slower than the 23% rise in the number of payments. We expect strong growth in November, as the biggest shopping days of the season are still ahead. After the festive season, the important thing to watch will be whether people keep using UPI for larger payments," he added.The October numbers come amid a debate over the introduction of MDR charges, with merchant bodies and sections of the payments industry raising concerns about the potential impact on merchant acceptance and the cost of digital payments. The latest figures, however, show no immediate slowdown in aggregate UPI activity.The increase in October also coincides with the festive season, when spending on shopping, travel and other retail categories typically rises. The monthly figures do not, by themselves, establish the impact of MDR on individual merchant categories.UPI's continued expansion underlines its growing role in retail payments. The challenge for the payments ecosystem will be to sustain this growth while developing a viable revenue model for banks, payment service providers and technology companies that support the infrastructure.You use AI every day. Now get your AI Quotient. Take the AIQ test.