Payments via UPI increase 650% in urban and rural India, research shows

By Puja Sharma

PayNearby releases a detailed analysis of ‘assisted financial transactions, in its second edition of the Pan-India report titled Retail-O-Nomics

PayNearby, India-based branchless banking, and the digital network announced that there was a growth of 25% and 14% in value and volume respectively, in assisted financial transactions across semi-urban and rural retail counters in India in 2022. This indicates a behavioral shift in consumers in these regions, with more citizens adopting assisted digital means for their banking and lifestyle requirements and getting incorporated into the formal economy.

The insight was shared as part of the second edition of the pan-India report titled ‘Retail-O-Nomics’, released by PayNearby. The report has been prepared basis transactions across million-plus retail touchpoints throughout the country. The findings of the report are based on business data collected for a comparison period, ranging from January to October 2022 vis-à-vis the same period during 2021.

The growth figures have been observed across different product offerings of PayNearby, including the Unified Payments Interface (UPI), cash withdrawal, MSME credit, utility payment, cash management, assisted e-commerce, and more. They were availed by citizens through local retail counters like Kirana stores, mobile recharge stores, medical shops, customer service points (CSPs), travel agents, etc.

As per the report, Unified Payments Interface (UPI) transactions saw a whopping 650% and 500% increase in value and volume across PayNearby retail counters, representing the growing adoption of UPI beyond Tier II regions in the country. This also highlights the pivotal role UPI can play in promoting digital financial inclusion.

In a key insight, the report states that the mPOS business has seen more than 100% growth, along with an over 25% increase in demand for micro ATMs and mPOS instruments. The upswing in demand for digital payment options at retail outlets underlines the critical role played by small retail stores in bridging the infrastructure gap and driving financial inclusion at the last mile.

Cash withdrawal business through micro ATMs and AePS, which continues to be one of the major income drivers for semi-urban and rural digital counters, has seen an overall growth of 8% in value and 9% in volume respectively. Cash withdrawals through micro ATMs have witnessed a 25% increase in value and a 28% increase in volume as compared to the same period last year. This growth figure shows the growing role played by this portable digital device in ensuring easy accessibility of bank accounts while helping merchants use cash-at-store more effectively and augment their income. However, there has been a slight dip in the average cash withdrawal per transaction from INR 2620 in 2021 to INR 2595 in 2022.

As per the report, semi-urban and rural India was equal participant in this double-digit growth in assisted financial transactions, and the rate of adoption was comparable between urban and rural underserved demographics.

The report also indicates a sharp growth of over 200% in the cash collection business (including EMIs) with a monthly average of INR 1400 crores, indicating demand for lending and other financing solutions, bouncing back to the pre-pandemic levels. Increased demand was witnessed across most cash collection processes, including collection from logistics and eCommerce companies, which saw a leap of over 89% in volumes. Insurance premiums at retail stores, too, saw a massive 370% in growth and a 365% increase in customers during the survey period.

Commenting on the report findings, Anand Kumar Bajaj, Founder, MD & CEO, PayNearby, said, “The findings in the report are inspiring and emphasise the fact that Bharat is gearing to walk hand-in-hand with India. Bharat is aspirational, and the increased offtake of green shoot services like assisted commerce, OTT subscription, and micro-lending validates our commitment to make these services easily available at a store nearby.”

Micro-credit for MSMEs, also saw a growth of 263% during this period; indicating a huge latent demand for viable credit in this segment that needs to be addressed for India to transition to the next stage of development.

In another interesting observation, around 32% of the banking transactions were registered during the non-banking hours between 6.00 pm to 12.00 am. This underlines the crucial role retail outlets play in serving the masses with their banking and digital needs.

Key Takeaways

• Around a 25% rise in value and a 14% rise in the volume of assisted financial transactions via retail counters
• Approx  25% increase in the demand for micro ATMs and mPOS instruments
• EMI collections for financial institutions and NBFCs have seen a steep growth of over 200%
• Bill payments service at local stores witnessed an increase of 12% in value and 10% in volume
• Digital loan for MSMEs sees a spurt of 263%