Mastercard, the second-largest payments network globally, has highlighted that India’s Unified Payments Interface (UPI) is a commendable catalyst for digitization in the nation. Nevertheless, the financial aspect of UPI remains a challenge for ecosystem participants, leading to financial losses. Sachin Mehra, Chief Financial Officer at Mastercard, discussed these dynamics at the UBS Fintech Leaders Conference.
Introduced in 2016, UPI has been pivotal in transforming the payments landscape in India, simplifying transactions and fostering digital adoption. Recent data from June indicates a remarkable 46% growth in UPI transactions compared to 26% in credit card spending and a 9% drop in debit card spending.
Mastercard affirmed its commitment to competing in India despite the challenges posed by UPI, emphasizing the importance of ensuring profitability within the payment ecosystem. Notably, the UPI system recorded over 10 billion transactions worth ₹15,18,456 crore in the previous month, signifying its substantial user base of 260 million individuals in the country.
Additionally, there are endeavors to expand the UPI network internationally, with a primary focus on countries with significant remittance flows such as the United States, the United Arab Emirates, and Singapore. Singapore’s PayNow system has already been linked with India’s UPI, allowing Indian users to remit up to SGD 1,000 per day.
However, despite UPI’s transformative role in India’s digital payment landscape, cash-on-delivery (COD) transactions continue to represent a substantial portion of the Indian e-commerce market, accounting for more than 50% of payments. Digital currency, especially UPI transactions, is gaining traction, but COD transactions remain prevalent, particularly in tier-1 cities and beyond .
Mastercard’s chief financial officer highlighted the organization’s willingness to persist in India’s challenging payment landscape while advocating for profitability in the ecosystem. It is important to acknowledge that the substantial growth in digital payments has not translated into immediate profits for all players involved.
