At close to Rs 74,000 crore, credit and debit card spends at point-of-sale (PoS) terminals may have stabilised at levels that are about 40% higher than they were pre-demonetisation, suggests data from the Reserve Bank of India (RBI) website. Card spends in May added up to Rs 73,649 crore, up 42% from Rs 51,884 crore in October, and 25% higher than Rs 58,734 crore in November. However, in no month so far have spends come close to the December peak of Rs 89,180 crore. Moreover, ticket sizes are trending down, suggesting cards are being used for smaller transactions too; from Rs 2,261 in October, they are currently at Rs 1,924. Nevertheless, they are above the December lows of Rs 1,678. For whatever reason, cards aren’t being used to pay for groceries or even at restaurants, except perhaps at very high-end eateries. Even when the shortage of cash was acute, the average ticket size was Rs 1,500.
Volumes, too, appear to have plateaued; at 383 million, they are up 67% between October and May, but well below the highs of December’s 532 million. Experts point out the upcoming festive season might see an uptick in spends via cards. Last November, the government decided to withdraw high-value currency notes, resulting in a cash crunch that lasted for over two months. Between January and March, the RBI gradually eased restrictions on cash withdrawals from bank accounts. Card spends seem to have slowed concurrently.
AP Hota, MD and CEO, National Payments Corporation of India (NPCI), believes the drop in the value of card transactions at PoS and e-commerce can be attributed to the return of cash. Hota points out the volume of transactions using RuPay cards at PoS machines and on e-commerce platforms had touched 59 million in December only to slip to 44 million in both May and June.
RBI does not provide data on card transactions made on e-commerce platforms. Most other modes of digital payments have maintained a steady rate of growth in recent months. The Unified Payments Interface (UPI) has grown the fastest among all retail modes of payment since demonetisation. The value of transactions on the channel jumped 34 times between November and June to Rs 3,070 crore. The value of transactions made through the Immediate Payments Service (IMPS) grew 83% over November to Rs 59,650 crore in June.
Prepaid payment instruments (PPIs), comprising mainly mobile wallets and prepaid cards, rose 110% over November to Rs 10,669.36 crore in May. The value of remittances made through the National Electronic Funds Transfer (NEFT) channel also grew 41% over November to Rs 12.41 lakh crore in May.
The Unstructured Supplementary Service Data (USSD) channel recorded an aggregate transaction value of Rs 31.32 crore in June which was 42 times higher than the November value of Rs 73 lakh. The use of USSD, an SMS-based money transfer service, has largely seen a decline since January, as cash came back into the system and the usage of the Bharat Interface for Money (BHIM) app took off after December. BHIM is available for use on feature phones and, as such, competes directly with the USSD service.