October 23, 2020

Digital money takes a big swipe at cash

Digital payments grew 57% year-on-year in the last fiscal with mobile wallets more than doubling and card payments rising 44%, helped by a strong government push particularly after the demonetization drive in November last year.
Aadhaar-enabled payment systems and the government-backed, Unified Payments Interface (UPI), have also helped in giving a big boost to digital transactions in 2016-17 when the total number of such transactions crossed 8.8 billion, according to the National Payments Corporation of India (NPCI) data shared with ET.
“We are seeing a huge jump in transactions on RuPay cards done at point of sales terminals as well as online, along with considerable growth on UPI (Unified Payments Interface) platform, which we hope will show more traction in the following year and help us achieve the target of 25 billion transactions for the year,” said AP Hota, managing director, NPCI.
Finance minister Arun Jaitley had set this target to be reached by the end of next fiscal year in his budget speech.
Armed with various modes like BharatQR — a QR code network for payment through any card to give a boost to digital payments at retail outlets, BHIM (Bharat Interface for Money) mobile payment app for UPI transactions, and various Aadhaar-enabled payments systems (AEPS), NPCI is confident of popularising digital payments even for small-value transactions.
“We have around 1 lakh BharatQR codes that have been distributed across merchant outlets this year and we plan to do another additional 93,000 the coming year,” Hota said.
While UPI and AEPS are the latest modes of transaction being pushed by the government, mobile wallets and plastic cards also helped digital payments show strong growth.
Mobile wallets increased to 1.1 billion transactions from 603 million transactions last year while card payments have reached 2.8 billion transactions against 1.9 billion transactions last year. Hota said that RuPay, the domestic card payments network, has reached 361 million of domestic cards in circulation and around 15 million of international cards. The company has around 33% market share in ATM transactions and 17% at PoS terminals.
“As of this year we have notched 195 million transactions of RuPay cards at PoS terminals and around 87.5 million transactions for online transactions,” said Hota. “Now around seven to eight banks are issuing all their incremental cards on the RuPay network.”
The new modes of digital payments, which have the special attention of the central government, are being strategically pushed by banks and payment companies to bring the rural poor within the digital fold. “UPI, including transactions on BHIM, has reached 16.7 million transactions in 2016-17 and that for AEPS reached 335 million transactions in total,” said Hota.
While these modes have just started, Hota hopes that initiatives like micro ATM-based digital transactions at fair price shops and coordinated push at business correspondent level activities through digital modes will increase AEPS Digital money takes a big swipe at cash adoption in rural areas.