Indians prefer using Unified Payments Interface (UPI), over debit card payments due to the ease of use and zero fees applicable, reported Mint. As per the publication, for every ₹100 spent on debit cards, consumers spent over ₹1,900 via UPI in the year ended 31 March 2023.
The data from Reserve Bank of India suggests that the aggregate debit card transactions by value stood at Rs 7.2 lakh crore in FY23. In comparison, the value of transactions via UPI stood at Rs 139.2 lakh crore, as per the NPCI data.
The volume of transactions via Debit cards have also been declining. In FY21 the volume was at 4 billion, which declined to 3.9 billion in FY22 and 3.4 billion in FY23. Meanwhile, the UPI transaction volume was at 83.8 billion in FY23.
While consumers have shifted to UPI due to convenience and ease of use, merchants are preferring the method due to zero merchant discount rate (MDR) fees. The inherent fees for merchants using debit cards for payments ranges from 0.5% to 0.9%. Contactless payments during the pandemic has also made the payment method familiar among the masses.
“Merchants prefer UPI payments since they do not have to deploy expensive PoS [point of sale] machines for accepting payments. A simple QR print acts as an acceptance device, and, accordingly, UPI acceptance has become ubiquitous across the merchant ecosystem, fuelling a virtuous cycle for UPI payments," said Rohan Lakhaiyar, partner, Grant Thornton Bharat to Mint.
Besides this, the settlement of transactions is immediate in UPI, while for debit card transactions it happens the following day.