Till Oct 2023, 75% retail digital payments done via UPI, used by 50 million merchants: Study
Unified Payments Interface (UPI), India’s digital transaction platform launched in 2016, is transforming credit access and open banking aiding financial inclusion.
A new study by IIM and ISB professors has revealed that since its launch in 2016, the Unified Payments Interface (UPI) enabled 300 million individuals and 50 million merchants to perform seamless digital transactions.
By Oct 2023, 75 pc retail digital payments in India were through UPI, says the study titled “Open Banking and Digital Payments: Implications for Credit Access.
It reveals that UPI has enabled underserved groups, including subprime and new-to-credit borrowers, to access formal credit for the first time. In regions with high UPI adoption, loans to new-to-credit borrowers grew by 4 pc, and to subprime borrowers by 8 pc. The average size of a fintech loan was Rs 27,778—about 7 times the rural monthly expenditure. Fintech lenders scaled rapidly, increasing their loan volumes by 77 times, far outpacing traditional banks in catering to smaller, underserved borrowers. “A 10 pc increase in UPI transactions led to a 7 pc rise in credit availability, reflecting how digital financial histories enabled lenders to assess borrowers better,” it says.
Between 2015 and 2019, fintech loans to subprime borrowers grew to match those of banks, with fintechs thriving in high UPI-usage areas,” it says. India’s success with UPI offers a replicable model for other nations, the research says.
