Digital transactions in India crossing 1 bn is great, but govt must do more to get to its ‘25 bn in 2018-19’ goal
Demonetisation gains may be hotly debated, but the government can unequivocally claim victory when it comes to digital transactions and pivoting towards a less-cash economy. Data released by RBI and the National Payments Corporation of India for December 2017 show that transactions via all digital modes—payment apps, mobile wallets, cards, UPI—crossed the billion mark that month. Although transactions can’t be a proxy for user of digital payment (digi-pay) modes, such success in just a year’s time shows that Indians are warming up to these. While growth in the number of transactions increased 11% over December 2016, the transacted amount, at Rs 125.53 lakh crore, was 20% higher. This means users are experimenting with high-value, digitally-completed transactions. UPI, whose popularity has soared, however, is not the only star; PPI, or mobile wallets, also recorded a meaningful growth. Although credit and debit card transactions fell, the amount transacted via this route, at Rs 52,800 crore, was higher than the Rs 52,200 transacted in December 2016.
With WhatsApp and Facebook looking to offer UPI to ease P2P (peer to peer) payments, India will receive a substantial impetus for a less-cash society. Besides, the growing e-tail space will give digi-pay a leg up. For Amazon, digital payments already comprise 60% of its overall payments in India. But, if the goal of ‘25 billion digital transactions in 2018’ is to be achieved, state-owned banks must proactively promote digital. Despite the government encouraging PoS-device penetration , this has not moved impressively. Also, making sellers bear the costs of digital adoption dampens the mood. With social platforms adopting digital payment, and e-commerce pushing for online wallets, a policy-side push to resolve such concerns can bring about a decisive shift towards a less-cash economy. May be, some day soon, Indian digi-pay can match AliPay—the company saw 1 billion digital transactions in just a single day in 2016.