It’s been a little over a year since demonetization came into effect and it looks like digital transactions are not only steadily gaining popularity among spenders, but is here for keeps. According to RBI, transactions through digital means rose to 1.06 billion last month from 997.1 million in November (2017). Interestingly, this is the first time that the transaction volume has crossed the 1 billion mark.
While digital transaction volumes have been steadily increasing since September 2017, the RBI in its report ‘Trends and Progress of Banking in India (2016- 2017)’ has highlighted that nearly 89% of the non-cash retail payments in terms of volume and 63% in value were made through cards and electronic modes.
With the government pushing to popularize digital payments, it may not be too far before it achieves its aim to grow India’s digital economy to $1 trillion by 2022.
In fact, some of the recent programs announced by the state government, including the merchant discount rate (MDR) applicable on transactions made through debit cards, BHIM UPI and Aadhaar-enabled payments system (AEPS) up to and including a value of Rs 2,000 which will be borne by the government for a period of two years are all right steps in the direction towards going cashless.
Further, the RBI, in its report, said, “The withdrawal of high-denomination SBNs (specified bank notes) provided a boost to the objective of a less-cash society as people shifted to card-based transactions and various modes of electronic payments.”
It highlighted that the volume of transactions through prepaid instruments (PPI), which includes PPI cards (mobile prepaid instruments, gift cards, social benefit cards, foreign travel cards and corporate cards), and mobile wallets jumped over two-fold in FY17 compared to FY16.
While the volume of PPIs grew to 1,964 million last financial year, the unified payments interface (UPI), saw 17.9 million transactions worth â‚¹6,950 crore.
Momentum to continue
As mobile banking transactions significantly increase, usage of PPIs such as mobile wallets also have peaked in terms of both volume and value.While the volume of PPI transactions in December was 99.1 million, Rs35.1 billion worth of transactions were recorded in December.Among many reasons for the spike in digital transactions, it is said that the growing understanding of the public about the benefits of digital payments and increasingly easier modes of payments like BHIM and Bharat QR have helped more people accept it.