Central bank data showed that overall retail credit transfers through various platforms rose 20% in value and 77% in volume in December 2021 over last year. But NEFT transfers rose only 6.5 per cent in value and 22 per cent in volume. During the same period, UPI transfers rose 98 per cent in value and 104 per cent in volumes.
“UPI payments have grown at 234% CAGR (37x) over the past three years, unfazed by the pandemic, while a few other digital payment instruments reported a sharp moderation,” said Nitin Aggarwal, senior analyst at Motilal Oswal Securities. “The UPI channel has surged backed by NIL charges and higher convenience for customers.”
As per experts, the surge in UPI transactions and fall in NEFT can be attributed to the ease of transaction on the former. UPI is a simpler channel where one need not know the beneficiary’s bank account details to transfer funds. In case of UPI, a QR scan is enough to send money. Also, while banks levy Rs 2 to Rs 5 rupee as transaction fee, no such amount is levied on UPI.
“UPI continues to outperform. Its market share, in terms of digital payments, has increased from 8.1% in January 2020 to 20% in January 2022,” said Ansuman Deb of ICICI Securities.
Central bank data showed that in terms of absolute transfers, NEFT still accounts for over 60% of the Rs 40.7 lakh crore worth of retail credit transfer in December 2021, while UPI has managed 20 percent share in a very short time.
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Share of NEFT in retail credit transfers fell in value terms from 75% in December 2020 to 66.8% in December 2021.In terms of volume, the share of NEFT fell from 9.7% in December 2020 to 6.7% in December 2021.
Share of UPI in retail credit transfers rose in value terms from 12% in December 2020 to 20 percent in December 2021.In terms of volume the share of NEFT rose from 70.4 percent in December 2020 to 80 per cent in December 2021.
