Surge In UPI Payments In India Is Linked To Increased Overspending: Experts
The increasing preference for purchases through UPI/QR codes can be attributed to the convenience of completing digital transactions swiftly using smartphones
As India's transition towards digital transactions and reduced cash usage continues to accelerate, an increasing number of individuals are utilising the Unified Payments Interface (UPI) to purchase daily essentials and expensive home appliances, high-end gadgets, and designer clothing, among other items. However, experts have cautioned that this seamless digital journey facilitated by UPI has also led to instances of overspending on items that individuals may not necessarily require.
The increasing preference for purchases through UPI/QR codes can be attributed to the convenience of completing digital transactions swiftly using smartphones. A recent survey conducted by IIIT Delhi revealed that approximately 74 per cent of individuals in the country are engaging in 'overspending' due to utilising UPI and other digital payment methods.
"The convenience and ease of digital transactions through UPI, in comparison to cash, may indeed lead to lower awareness of spending, as transactions are seamless and reduce the tangible feel of money leaving one's possession," Prabhu Ram, Head of Industry Intelligence Group at market intelligence firm CMR, told the news agency IANS.
According to the most recent figures released by the National Payments Corporation of India (NPCI), UPI transactions surged to 1.33 billion in April. This represents a 50 per cent year-on-year growth in UPI transaction volume. The previous year saw a remarkable 60 per cent increase in UPI transactions, reaching an all-time high of 11.768 billion.
According to Ramesh Narasimhan, Chief Executive Officer-India at Worldline, UPI continues to dominate as the undisputed leader in digital payments, driven by significant growth in mobile transactions. "This trend underscores users' growing confidence and familiarity with smartphone-based payment methods," Narasimhan added.
The average ticket size (ATS) of UPI transactions has declined 8 per cent, dropping from Rs 1,648 to Rs 1,515. Experts note in the report that consumer spending in India is rising, which is evident in increased purchases of cars, smartphones, TVs, and other goods, contributing to the country's economic growth. However, this trend has also led to instances of overspending on certain high-value items facilitated by UPI.
A recent report by Nielsen Media India, commissioned by Amazon India, highlights the country's growing preference for digital payment methods. 42 per cent of consumers expressed their intention to opt for UPI for online festive shopping.
Also Read: NPCI Set To Revisit 30% UPI Market Share Cap By Year's End: Report
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