Arvind's Newsletter

1.How UPI Lite can do the heavy lifting for NPCI in low value transactions and unburden the banking systems. This Economic Times reports.

Since its launch in 2016, UPI has grown exponentially — from a modest 2.65 million in the beginning to a whopping 83 billion annual transactions in FY23. Now, the National Payments Corporation of India (NPCI), which owns and operates UPI, has a mega aspiration — clock a billion transactions per day on the platform in a couple of years.

Two years ago, UPI had registered around 2.5 billion transactions per month. Last month, it recorded close to 9 billion transactions worth INR14 lakh crore — 3x growth. A similar growth will take UPI to 30 billion transactions a month by April 2025

But there is a flip side to this success story. Since UPI transactions happen directly from an account, they hit a bank’s core banking solution (CBS) software, which is not designed to process such a huge volume of transactions. Some of these CBS platforms are based on technology and software first developed in the 1990s and are not designed to handle such a load. This resulted in a large number of transaction failures back in 2020 and 2021, following which NPCI and RBI forced the banks to invest in servers and CBS to manage the high volumes.

But what can help take the load off the banking system is UPI Lite, designed by NPCI and launched by the RBI in September 2022 to facilitate faster and easier for low-value transfers. UPI Lite is a virtual on-device wallet within the same UPI account and is meant for transactions below INR200. It does not require a UPI PIN, which means the transactions can be faster and smoother with lower chances of failure. The refunds in case of a failure happen on the original UPI account. These transactions do not appear on bank passbooks and can be viewed on the UPI app the customer uses.

A large number of UPI transactions – probably around half – are below INR200. In April, 84% of the merchant transactions were below INR500. Merchant transactions account for around 50% of the overall transactions on the UPI platform. Even 54% of the inter-personal transfers are below INR500 on the UPI platform, or around three-quarters of the 9 billion transactions that took place on the UPI platform last month.

While it is not clear how the UPI Lite adoption will pan out, it is an ideal, if not essential, condition for the platform to be able to do a billion transactions a day. Far too many failures can increase the frustration of customers (the payer and receiver) for UPI to remain the most loved platform.

2.Could early shift to electric could make Royal Enfield a global market leader? Royal Enfield (RE) is investing ₹1,000 crore on a new facility to make electric motorcycles, indicating the iconic brand is preparing for a transition to battery-powered bikes. Reports the Mint.

RE, which is a division of Eicher Motors, has made big inroads in the global mid-range (250-750cc) touring/cruiser market. It has established a reputation for making good petrol bikes and it has smartly leveraged its century-old brand to grab global marketshare.

In FY23 RE’s exports crossed a lakh, with 1,00,055 bikes sold abroad. It is targeting a 10% marketshare in the global mid-range segment and is already close to achieving that in a market estimated at 1.1 million (11 lakh) units. RE operates with retail stores and a business model of completely knocked down kits assembled by local subsidiaries in four nations – Brazil, Argentina, Thailand and Colombia. Bike exports comprised about 14% ( ₹2,080 crore) of sales in FY23.

Overall sales volumes came in at 8,34,895 units in FY23, representing about 39% growth. In the mid-size segment (which comprises about 8% of India’s motorcycle market) it has a near 90% marketshare. Read on.

3.AI Girlfriend ? Snapchat influencer Caryn Marjorie made more than $71,000 in one week after releasing an AI version of herself, CarynAI, and charging fans $1 per minute for CarynAI to be their virtual girlfriend, Fortune reported. As of last week, CarynAI had more than 1,000 “boyfriends” (aka paying subscribers), and Marjorie estimates she could eventually bring in $5 million/month from her chatbot.

As with all recent AI stories there is dark side. In the weeks since it launched in beta testing, the voice-based, AI-powered chatbot has engaged in sexually explicit conversations with some of its subscribers reports the Insider.

"The AI was not programmed to do this and has seemed to go rogue," Marjorie told Insider. "My team and I are working around the clock to prevent this from happening again."

4.Early election results suggest Turkish President Recep Tayyip Erdogan will face an unprecedented runoff. Polls had suggested he could lose a tight race after 20 years in power, but preliminary results put him narrowly ahead of his rival. Erdogan remains the favourite in the second round in two weeks and his bloc is likely to retain control of parliament via a coalition. He has greatly expanded his power during his tenure, making himself head of both state and government: One of his opponent’s campaign promises was to reduce those powers. High inflation, slow economic growth, and a much criticised response to February’s earthquakes had left Erdogan vulnerable. The Financial Times states that Erdogan holds upper hand as elections goes into run-off. As well as building a lead of more than 2 mn votes over his rival in the presidential race, his coalition appeaed on course to win an outright majority in the Turkish parliamentary election, bolstering his position in any run-off.

5.As the travel industry bounces back after the pandemic, passenger traffic at airports are rising again. Here are the top 10 busiest airports in the world as per data from Airports Council International (ACI).

In 2022, worldwide passenger traffic came near to 7 billion, an increase of almost 54% from 2021, and a 74% recovery from pre-pandemic levels.

Five of the top 6 airports are in the USA with Atlanta the busiest at 94 mn passengers. The only Indian airport in the list is Delhi which comes in at number 9 (59 mn passengers). Dubai is the top airport outside of USA at number 5(66 million).