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Is UPI being preferred over prepaid instruments (PPIs) for peer to peer payments in India?



As per the recent news report, aggregate value of transactions made through United payments interface (UPI) during May 1st –May 28th had a higher growth rate, than transactions made through mobile wallets and other prepaid payment instruments. The aggregate value of transactions between May 1st and May 28th was Rs 2450 crore, which is 11.42 % higher than the transaction value in April. At the same time, the transactions through PPI stood at Rs 2280 growing at a rate of a modest 2.1 % over the April value. Additionally, the number of transactions from UPI channel was 8.2 million as compared to 82.7 million transactions made through PPIs.

Growth of UPI v/s PPI transactions - May 2017
The numbers suggest  that UPI is increasingly being used for peer-to-peer transactions for a higher average ticket-size of about Rs 2988. On the other hand, average ticket size for PPIs stands at Rs 276 for both peer-to peer and merchant payments. Mobile wallets in India being semi-closed, users generally load the wallet up to the extent of their usage which includes merchant payments, since money is locked in the wallet. UPI apps use existing bank accounts, which do not involve the additional process of loading the wallet from the bank account. This could be one of the reasons for a higher average ticket size for P2P transactions via UPI. It is still early days for UPI but the higher growth of aggregate transaction value as compared to PPI, indicates that it has received a positive response from the consumers.

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