PhonePe CEO says jump in UPI transactions simply driven by cashbacks
PhonePe is the payment arm of ecommerce major Flipkart and was one of the first major platforms to adopt UPI last year.
BENGALURU: In perhaps a first-of-its-kind public outburst around incentivisation on the Unified Payments Interface (UPI) platform, chief executive of PhonePeSameer Nigam attributed the huge jump in UPI transactions in December to artificial transactions driven by cashbacks, which have inflated the overall transaction number.
“I love @UPI_NPCI. But the 145 million transaction count is badly polluted. 6.3 million UPI P2P transfers between PaytmVPAs to Yes Bank VPAs. Sounds impressive. But 5.6 million (90%!!!) transfers were for Rs 1 each. And only 60,000 distinct Paytm users did the transfers. That’s 105 transactions of Rs 1 per user!,” wrote Sameer Nigam on micro blogging site Twitteron Wednesday. He later deleted the tweet.
PhonePe is the payment arm of ecommerce major Flipkart and was one of the first major platforms to adopt UPI last year. It was the largest private player on the platform till the launch of Google Tez in September last year. Paytm launched on UPI in November and the competition is set to increase with the entry of WhatsApp in the space.
PhonePe processed 22 million UPI transactions last month, from 4.7 million unique customers.
Though Paytm refused to respond to Nigam’s tweet, when ET asked how Paytm looks at incentives being offered to encourage UPI adoption, a Paytm spokesperson said: “In order to continue to build what Paytm has built and in support of the digitisation agenda that our Prime Minister has, we have already said that we will spend $1.6 billion over the next three years. Some of that money will go towards educating customers to do transactions using our platform and anytime a new kind of product is introduced to a customer they need time to adapt to those platforms.”
While UPI has been one of the major success stories for the digital payments ecosystem, it has also had its own share of controversies. Incentives offered for UPI payments, even for peer-to-peer transactions, have been a major point of debate in the banking and payments world.
“It depends on which side of the debate you are in, whether these offers will create new customers to come onboard or only attract deal seekers, who will dump the platform once the deals vanish is something that only time will tell,” said a senior banker with a private sector bank on condition of anonymity.
With a value of around Rs 13,144 crore being transferred through UPI in December alone, bankers say that its overall growth has been phenomenal. Even if few transactions are incentivised, it should not be a major problem, they say.
Infact, Google Tez as well as Paytm have spoken about their plans to get more merchants to accept UPI payments either through QR codes or through pull transactions from merchants.
BENGALURU: In perhaps a first-of-its-kind public outburst around incentivisation on the Unified Payments Interface (UPI) platform, chief executive of PhonePeSameer Nigam attributed the huge jump in UPI transactions in December to artificial transactions driven by cashbacks, which have inflated the overall transaction number.
“I love @UPI_NPCI. But the 145 million transaction count is badly polluted. 6.3 million UPI P2P transfers between PaytmVPAs to Yes Bank VPAs. Sounds impressive. But 5.6 million (90%!!!) transfers were for Rs 1 each. And only 60,000 distinct Paytm users did the transfers. That’s 105 transactions of Rs 1 per user!,” wrote Sameer Nigam on micro blogging site Twitteron Wednesday. He later deleted the tweet.
PhonePe is the payment arm of ecommerce major Flipkart and was one of the first major platforms to adopt UPI last year. It was the largest private player on the platform till the launch of Google Tez in September last year. Paytm launched on UPI in November and the competition is set to increase with the entry of WhatsApp in the space.
PhonePe processed 22 million UPI transactions last month, from 4.7 million unique customers.
Though Paytm refused to respond to Nigam’s tweet, when ET asked how Paytm looks at incentives being offered to encourage UPI adoption, a Paytm spokesperson said: “In order to continue to build what Paytm has built and in support of the digitisation agenda that our Prime Minister has, we have already said that we will spend $1.6 billion over the next three years. Some of that money will go towards educating customers to do transactions using our platform and anytime a new kind of product is introduced to a customer they need time to adapt to those platforms.”
While UPI has been one of the major success stories for the digital payments ecosystem, it has also had its own share of controversies. Incentives offered for UPI payments, even for peer-to-peer transactions, have been a major point of debate in the banking and payments world.
“It depends on which side of the debate you are in, whether these offers will create new customers to come onboard or only attract deal seekers, who will dump the platform once the deals vanish is something that only time will tell,” said a senior banker with a private sector bank on condition of anonymity.
With a value of around Rs 13,144 crore being transferred through UPI in December alone, bankers say that its overall growth has been phenomenal. Even if few transactions are incentivised, it should not be a major problem, they say.
Infact, Google Tez as well as Paytm have spoken about their plans to get more merchants to accept UPI payments either through QR codes or through pull transactions from merchants.
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