More than two in three Indians use UPI: Survey
The survey found that 15% of UPI users used it for online shopping, 17% for money transfers to friends and family, and 6% for paying bills.
The Unified Payments Interface (UPI) has transformed the payment landscape in India. Initially used mostly for personal or P2P transactions, UPI’s primary use today is to facilitate payments to merchants or P2M transactions. Intrigued by this shift and also curious about the predominant use of UPI, the Centre for Rapid Insights conducted a mobile phone survey of 2,098 respondents across 20 states and Union Territories. The results revealed that nearly two-thirds of the respondents used UPI, and the most popular use of UPI (around 68% of respondents) was making payments at local shops and merchants.
A slightly higher proportion of men (70%) reported using UPI compared to women. However, the use among genders were similar: 62% of men and 59% of women use UPI for transactions with local merchants. This comparison merits caution due to overrepresentation of men in our survey: 75% of respondents were men, 22% were women, and 3% identified as third gender. This imbalance likely stems from the survey’s reliance on mobile phone access. According to recent data, 78% of the male adult population in India owns a phone, compared to only 64% of the female population. As a result, the gender disparity in our sample limits our ability to draw detailed gender-based comparisons.
Irrespective, the survey unearthed more interesting findings about the usage patterns of UPI.
For instance, we found that 15% of UPI users used it for online shopping, 17% for money transfers to friends and family, and 6% for paying bills. These trends are also reflected in the National Payments Corporation of India (NPCI) data, which shows significant volume growth in P2M transactions compared to P2P. This growth is possibly due to government incentives for promoting P2M UPI transactions. Notably, most P2M transactions are of low value, indicating that UPI may be replacing petty cash transactions. For example, in July 2024, seven billion P2M transactions, constituting half of all UPI transactions, had an average value of just ₹113, suggesting UPI’s growing role in facilitating small-scale transactions typically handled in cash.
On the other hand, less than one-sixth of the respondents reported using UPI for sending money to friends and family, a trend consistent across both urban and rural users. These transactions are recorded as P2P and are typically higher in value but less frequent. NPCI data from July 2024 reveals that nearly 1 billion P2P transactions (20% of all P2P transactions) had an average value of nearly ₹10,000, indicating uses such as remittances, allowances, and rent payments among others.
Interestingly, sending money to friends and family was more popular among women and third-gender individuals than among men, while using UPI for online shopping was most popular among third-gender users of UPI. Despite UPI’s broad adoption for merchant transactions, its role in utility payments remains surprisingly underutilised.
The survey also highlighted that nearly one-third of the respondents do not use UPI. Of these, almost 70% resided in rural areas, 20% in semi-urban, and 10% in urban areas, suggesting significant room for growth in UPI adoption in rural India. The classification into urban, semi-urban, and rural areas is based on census data. Areas where more than 66% of the population lives in urban settings are classified as urban. Areas with 33% to 66% urban population are considered semi-urban, while those with less than 33% urban population are classified as rural.
This survey not only corroborates prevailing trends of UPI usage but also uncovers several intriguing questions for further investigation. For instance, while P2P transactions were reported as the second most popular transaction type, it would be insightful to identify the specific purposes for these transactions. Additionally, while nearly half of all P2P transactions in July 2024 had an average value of ₹166, suggesting potential misclassification of many P2M transactions as P2P, rectifying this misclassification can prevent revenue loss for UPI stakeholders such as banks and third-party app providers. Moreover, the usage of UPI should not be limited to just low value transactions.
A more comprehensive study is essential to thoroughly understand how UPI impacts both users and merchants and to identify barriers preventing its application in broader, more significant use cases. This will not only enhance UPI’s functional efficacy but also ensure its strategic alignment with broader financial inclusion and digital empowerment goals in India.
(This is the latest instalment in a new series that uses insights from rapid polling across the country on topical issues. The polls are run by the Centre for Rapid Insights (CRI), based at Artha Global. Neelanjan Sircar is its director. Lakshay Narang and Nikita Kwatra are, respectively, senior associate and principal at Artha Global.)