Leading banks hold 80% of UPI transaction volume in October

The Unified Payments Interface (UPI), which recently claimed to be the fastest-growing payments system in the world and crossed 1 billion transactions in a month for the very first time, has outnumbered other modes of payments in terms of adoption in India.

While the largest market shareholders in the UPI ecosystem - PhonePe, Google Pay and Paytm - haven't revealed the number of transaction that happened via their platform, the leading banking partners providing UPI handles to these platforms are said to hold 80% of the overall transactions.

The volume breakdown further predicts that Yes Bank is leading the pack with 415 million transactions through its UPI handles. In contrast, State Bank of India, Paytm Payments Bank, HDFC Bank, Axis Bank and ICICI Bank clocked about 500 million transactions collectively.

According to an ET report, Paytm Payments Bank is expected to have processed 200 million transactions alone.

For the uninitiated, all the banking partners mentioned above allow UPI payments through their mobile applications as well as provide UPI handles to third-party apps such as PhonePe, Google Pay, FreeCharge, and Mobikwik.

For instance, Yes Bank powers the UPI of PhonePe and Google Pay's UPI handle is provided by HDFC Bank. Apart from the transactions via their platforms, these private payments apps contribute a major portion of their volume too.

And to augment its transaction numbers and to avoid cases of transaction declines, PhonePe is in talks with ICICI bank to extend a UPI handle for its customers.

Data available on NCPI, the umbrella organisation behind UPI, reflects that there are 141 banks can issue UPI handles.

According to media reports, PhonePe had processed 342 million transactions in August followed by Google Pay (320 million) and Paytm (157 million). The data for September and October isn't available.

Paytm, however, had distanced itself from focusing on incentivising peer-to-peer transactions. Instead, it has started focusing on merchant focused UPI or P2M.

Separately, a Razorpay report on UPI growth highlighted that the transactions through its platform grew 11.02% month-on-month in October. UPI’s share of digital transactions has increased from 45% in September to 50.49% in October.

On the other hand, transactions through card accounted for 42.56% of all digital transactions in September, which fell by 6.89% to 35.67% in October.