In 2023, Unified Payments Interface (UPI) transactions in semi-urban and rural retail stores in India saw a remarkable upsurge. The volume of transactions increased by 118%, while the value of these transactions went up by 106%. This significant growth highlights the expanding adoption of UPI beyond tier-II regions, as indicated in a report by PayNearby.
The study, titled ‘Retail-O-Nomics,’ was conducted by PayNearby across more than 10 lakh retail touchpoints, including kirana stores, mobile recharge shops, medical stores, customer service points, and travel agents throughout the nation. This wide-ranging study unveils a comprehensive view of the current state of digital transactions in these areas.
In addition to the surge in UPI transactions, there was a notable 65% increase in cash collections at retail counters. This rise indicates an escalating demand for credit and financial solutions, with an average monthly collection of ₹1,700 crore. The 25% surge in Equated Monthly Installment (EMI) collections for Non-Banking Financial Companies (NBFCs), Microfinance Institutions (MFIs), and small finance banks further underscores this trend.
The report also sheds light on the rapid growth in various loan categories, including business, personal, and gold loans, surpassing 10 lakh disbursements during the year. A significant portion of these loan applicants, about 21%, were new to credit (NTC), primarily in the average age range of 28-30 years.
Another key finding was the 9% increase in newly registered digital retailers, resulting in a 10% rise in transactions both in volume and value. These transactions span a diverse array of services, including utility payments, cash collection, credit, insurance, and assisted commerce.
In the realm of financial inclusion, there was a substantial growth in new account openings. Retail counters opened 1.75 lakh new current and savings accounts, experiencing a remarkable 202% growth in account balances compared to the previous year. Additionally, insurance policy purchases and premium collections rose significantly, by 150% in transaction volume and 140% in new customer adoption.
Furthermore, there was a 17% increase in the value of Micro ATM and Aadhaar-enabled Payment System (AePS) cash withdrawals. Although the transaction volume decreased, the average cash withdrawal per transaction witnessed a slight growth. AePS withdrawals consistently surged by 30-40% during Direct Benefit Transfer (DBT) releases, notably during PM Kisan Yojana credits, compared to the rest of the year.
The ‘Retail-O-Nomics’ report from PayNearby paints a vivid picture of the evolving financial landscape in semi-urban and rural areas of India, with UPI transactions leading the transformation in the retail sector.