Only 3 to 7% rural consumers actively using UPI to transact: report

Financial inclusion continues to elude people in rural India despite the usage of one of the robust payments systems in the world, the Unified Payments Interface (UPI), doubled in FY22.

Six years after UPI’s launch, only a mere 3-7 per cent of rural consumers are actively using UPI to transact, according to a field research by 1Bridge, a village commerce network. In 2016, India’s UPI – developed by the National Payments Corporation of India (NPCI) – processed a record worth of ₹84 lakh crore across 4,597 crore transactions in FY22. The value and volume of transactions had amplified by twice the FY21 figures.

1Bridge, which has its presence across 10,000 villages in the states of Karnataka, Maharashtra, Andhra Pradesh, Telangana, Tamil Nadu and Odisha, offers a technology platform to local entrepreneurs (known as 1Bridge Advisors) in the villages, that facilitates the creation of more income by offering deliveries, assisted commerce services, and undertake financial transactions in their villages.

For this survey, it worked with these micro-local entrepreneurs or 1Bridge Advisors as they are known in 500 villages, to understand the usage of UPI for payments by their customers.

Also read: Coming soon: Card-less cash withdrawals at all ATMs via UPI

According to the research, around 40 per cent of those surveyed, said that they were unaware of UPI and digital payments and did not know how to use them. Some were worried that they would lose their money through digital payments, while about 20 per cent expressed a preference for cash-based payments, despite having knowledge of UPI, while 10 per cent cited low bank balance or inactive bank accounts.

Therefore, experts felt that there is a dire need to ramp up the infrastructure of UPI. There are several banks that still lack good UPI infrastructure and in many cases, UPI transactions fail to go through, especially in villages.

1Bridge, village-tech start-up had raised $2.5 million funding led by Netherlands-based impact investor C4D Partners last year. It has now announced a partnership with WhatsApp, to encourage financial inclusion in rural India. They will create awareness about the digital payment interface and aid people to do their first digital transaction and give freebies in the form of cashback to win their trust.