With cash flowing back into the system over the last few months, the average number of digital transactions per day has slipped from 44 million in March 2017 to 37 million in June, according to a recent presentation made by NPCI chief AP Hota. This does not mean that digital payments are back to their pre-demonetisation levels, indeed there was a big momentum in digital payments even before demonetisation. At Rs 75,100 crore (extrapolated over April, based on RBI’s representational data), usage of debit/credit cards at retail outlets in May 2017 was below the December 2016 peak of Rs 89,200 crore, but way higher than Rs 40,500 crore in May 2016. The use of PPIs doubled in December and, to that extent, May 2017’s Rs 11,500 crore looks sluggish—but it is dramatically higher than May 2016’s Rs 5,000 crore. IMPS transactions have slowed in the past few months but, at Rs 58,600 crore in May 2017, they are 2.7 times more than the Rs 21,600 crore in May 2016. The question, in this context, is what does the government need to do to achieve its digital payments targets?
Particularly worrying, in this context, is Hota’s data that shows the number of BHIM downloads is down from 6.8 million in January 2017 to a mere 0.6 million in June. As a result, while the target for UPI+BHIM is 40 crore transactions in FY18, the actual achievement in Q1 was a mere 2.5 crore, or a little over 6%. For all digital transactions, against the target of 2,500 crore for FY18, the achievement for Q1 was a mere 230 crore. Given households, small traders and small businessmen are all more comfortable with cash payments, the fact is the government hasn’t spent enough time and resources in effectively promoting the use of digital channels. Since banks have always been reluctant to promote the UPI channel for fear of losing customers—the channel can be accessed across apps—and will remain reluctant, it is up to the government to up the ante. The Digidhan Mela initiative might boast of 27 lakh merchants coming on board and more than 20 million individuals registering, but this is not reflecting in the number of transactions. What’s called for is a far bigger initiative.
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The government needs to create a separate organisation and give it a large enough budget so that it can make the channels user-friendly, much like Paytm has done—promoting digitisation requires a more focused approach, with professionals doing the job rather than bureaucrats. The BHIM app, for instance, is a simple enough product but far less popular than a Paytm because it hasn’t been promoted enough. The product needs to be pulled rather than pushed, but for that to happen customers, must be convinced of its benefits. Since, for instance, some of Paytm’s attractions lie in the tie-ups with cab aggregators and the cash back offers, a BHIM too needs to be made more attractive with such deals and more. Some part of the problem, of course, is linked to the desire to avoid tax payments, but once GST stabilises, this should be less of a problem. The government, meanwhile, has to continue to push digital payments, and that means both addressing pain points for users and, like Paytm, finding new ways to lure them.