Unified Payment Interface (UPI) is emerging as the favourite mode of payment for small investors flocking to initial public offerings, comprising 42 per cent of all retail applications in IPOs in June. However, payment failures continue to frustrate users on UPI, two years since the payment system was opened to IPO applications.

According to data from the National Payments Corporation of India (NPCI), which created UPI, 1.9 million retail investors applied for IPOs through UPI in June of the total 4.7 million retail IPO applicants during the month as calculated by Prime Database. Retail investors are those with share purchase applications of up to Rs 2 lakh, which is also the upper limit for UPI transactions in IPOs.

“The present volumes show investors are gradually getting the hang of using UPI for IPO applications, and that one might see it double in three to four years. As the percentage of younger investors increases, such new methods of investing will pick up,” said Mihir Gandhi, partner and leader (payments transformation) at PwC.

Moreover, UPI apps and the application process could increase the use of this payment mode, Gandhi said. For instance, if the number of clicks to apply can be reduced without compromising security, customers may find it more useful.