Other than the relatively new Unified Payments Interface (UPI), which has grown off a small base, mobile wallets are the other digital payment mode that seems to have benefited hugely from demonetisation, with transaction volumes growing 192% in the April-November 2017 period over the corresponding period a year ago.
According to data released by the Reserve Bank of India (RBI), the eight-month period saw mobile wallets notching up an aggregate 1,832.5 million transactions, up from 628 million transactions during the same period in 2016.
An obvious casualty of demonetisation was ATM usage which fell by about 4% year-on-year (y-o-y) and clocked 5,590 million transactions during the period. While a decline in the use of cash could be one reason for the drop in ATM usage, some industry players have also pointed to the fact that the introduction of a larger denomination note — `2,000 — may have resulted in consumers making fewer card swipes for withdrawing the same amount of money.
The Immediate Payment Service (IMPS) saw steady growth, rising 128% y-o-y in volume terms to 603 million during the period under review. The volume of credit and debit card transactions at point of sale (POS) terminals rose 70% y-o-y to 3,034 million during April-November 2017.
Outdoing all of these retail payment channels, UPI has grown nearly 400 times between November 2016 and November 2017. It clocked 105 million and 145 million transactions, respectively, in the two months of November and December 2017.
On November 8, 2016, the government had announced the withdrawal of currency notes of `500 and `1,000 denominations, resulting in 86% of the cash then in circulation going out of use. The ensuing cash crunch had pushed people to digital modes of transactions, leading to an astronomical rise in transaction volumes. While the impact of demonetisation persisted till about the middle of 2017, digital transaction volumes have steadied ever since.