Retail Stores’ UPI Transactions Up 118%, 65% Increase in Cash Collections in 2023 

December 21, 2023: In 2023, Unified Payments Interface (UPI) transactions at rural and semi-urban retail establishments experienced a significant increase, with volumes up by 118% and values up by 106%, illustrating the expanding adoption of UPI beyond tier-II regions, according to a report by PayNearby. The report, titled ‘Retail-O-Nomics,’ also noted a 5% growth in the value of Mobile point-of-sale (mPOS) acceptance, emphasizing the rising utilization of advanced technology among small merchants.

PayNearby, the country’s largest branchless banking and digital network platform, conducted the study across more than 10 lakh retail touchpoints, including kirana stores, mobile recharge shops, medical stores, customer service points, and travel agents throughout the nation.

The report highlighted a substantial 65% increase in cash collections at retail counters, indicative of the escalating demand for credit and financial solutions, with an average monthly collection of ₹1,700 crore. Robust credit demand was evident in the 25% surge in EMI collections for Non-Banking Financial Companies (NBFCs), Microfinance Institutions (MFIs), and small finance banks.

Business, personal, and gold loans experienced rapid growth, surpassing 10 lakh disbursements during the year, with 21% of applicants being new to credit (NTC) and an average age of 28-30 years.

The report emphasized the 9% increase in newly registered digital retailers, resulting in a 10% rise in transactions both in terms of volume and value. Apart from banking and financial services, these transactions encompassed digital services such as utility payments, cash collection, credit, insurance, and assisted commerce.

Saksham Bhagat, Co-founder at Swift Money, emphasized at the Internet Commerce Summit that UPI is playing a pivotal role in driving the adoption of digital payments among retailers. According to him, UPI checks all the right boxes, and MSME retailers are increasingly realizing the value of incorporating digital payments into their businesses due to the ease of use and enhanced customer convenience.

Notably, larger cities exhibit a higher UPI usage compared to smaller ones, with the share of UPI in digital transactions witnessing an increase in all metro cities post-COVID. The FMCG and retail sectors experienced remarkable growth in UPI transactions, with Food & Beverage and Fashion & Lifestyle following suit.

Retail counters saw the opening of 1.75 lakh new current and savings accounts, with a remarkable 202% growth in account balances compared to the previous year. Insurance policy purchases and premium collections witnessed a surge of 150% in transaction volume and 140% in new customer adoption.

Micro ATM and AePS cash withdrawals increased by 17% in terms of the value of purchases. Despite a decrease in transaction volume, the average cash withdrawal per transaction slightly grew from ₹2,595 in 2022 to ₹2,624 in 2023.

The report also highlighted consistent surges of 30-40% in AePS withdrawals during Direct Benefit Transfer (DBT) releases, particularly during PM Kisan Yojana credits, compared to the rest of the year.