Growth of India’s UPI Outshines Top P2P & P2M Systems Globally

P2P and P2M systems – one of the key segments where FinTech and banks have significantly overshadowed government-launched, digital real-time payment systems. The PayPals, Venmos, and Zelles have been enjoying their leading positions in their respective markets – the situation was similar in India, where private wallets enjoyed the lead in the Indian market until the NPCI (National Payments Corporation of India) launched UPI (United Payments Interface) in 2016, which turned out to be a game-changer for the digital payments space in India and led to a drastic shift from traditional cards and wallets to account-based payments. In a recent study conducted by Sensor Tower, it was revealed that three Indian P2P/P2M payment apps are on top 10 FinTech apps downloaded worldwide, of which Google Pay (Tez) and PhonePe occupy the first two positions respectively. BHIM (UPI) holds the eighth position in the list.

In the last three years since UPI was launched, the transaction volumes have grown significantly to USD 20.51 billion (April 2019). We will continue to witness this rapid growth rate as new features are introduced and more rural people start using it. The open architecture of UPI has also enabled global tech giants such as Google and Facebook (WhatsApp) as well as local players such as Flipkart (PhonePe) to build their own payment applications. The players who have created their own applications on UPI are now competing to take the lead in the total transaction volume in the country by marketing their applications and introducing cashback vouchers, which, in turn, is helping in the adoption of non-cash payments and UPI being more successful.

We have compared the growth of transactional volume of top P2P/P2M players from different regions with CQGRs (compounded quarterly growth rates) in the chart below:

  • Venmo and Square have increased rapidly in the past two years with a CQGR of 15.1% and 6.5% respectively.

  • PayPal has recorded a CQGR of 6.3% where it has grown from USD 99 billion in Q1 2017 to USD 161 billion in Q1 2019.

  • With a CQGR of 14.2%, Zelle has grown from USD 17.5 billion in Q3 2017 to USD 39 billion in Q1 2019.

Among the P2P/P2M payment systems studies, there has been a growth in the transactional value over the past couple of years, which shows that society is accepting this system and is working towards the cashless ecosystem. Private players such as PayPal, Venmo, Zelle, and Square, as well as government initiatives in developing countries such as UPI (India), have been critical components in moving toward digital cashless societies where both the receiver and sender need to be part of a financial ecosystem to enable transactions between them.

In the case of India, it is interesting to note that UPI has been rapidly growing over the years with a CQGR of 65.4%. In Q1 2019, the transaction value rose to USD 50.58 billion from USD 0.86 billion in Q1 2017, which clearly illustrates the stupendous growth of the country’s P2P/P2M ecosystem, and when compared with other platforms across the world, it is evident that UPI’s growth trajectory is on the rise.

Note: We have considered the transaction value of the last two years to compare the relative growth of major P2P/P2M platforms globally. We aim to analyze the data from the first three years of each platform’s existence as well as include more platforms in our future articles.