Mumbai Mumbai: Unified Payments Interface (UPI) transactions have grown at a staggering 75 per cent compound annual growth rate (CAGR), while UPI spends have grown at 68 per cent CAGR in the period August 2019-August 2024, a report on Friday said. This information was given in, because the growth of the card industry remained slow. The immense popularity of UPI is seen from the transaction volume ratio, which is 38.4 times the credit card transaction volume, according to an Axis Securities report.
UPI remains a preferred medium for low-value payments as 96 per cent of transaction volumes are below Rs 2,000, although its contribution to total UPI spend was 33 per cent (as of August). However, given the lower ticket size of UPI transactions, UPI-to-credit card spend stood at 0.3x in August, which is largely stable at current levels. The industry's net card additions were 924,000 in August, compared to 755,000 in July. However, momentum has declined sharply (down 34 percent on a year-on-year basis). “We believe this reflects issuers’ caution and selective clients amid asset quality concerns in the sector. In the first five months of FY25, the industry recorded Rs. 6 million as compared to Rs. 6 million in the same period last fiscal. Added 3.7 million cards,” the report noted.
With the shift in consumer preferences towards the use of credit cards and UPI, debit cards as a payment medium have not been able to keep pace. The report said that in contrast to the growth of credit cards, debit card transaction volumes and spends have declined sharply at 20 per cent and 6 per cent CAGR during August 2019-August 2024. In August, private banks added 583,000 customers out of the industry total of 924,000 customers (63 percent market share in customer sourcing). The report expects growth momentum to resume with the upcoming festive season.
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