Digital payments pick up in India

Posted on July 06, 2018 by Sumita Kale

Digital payments in India have continued to gain traction. The value of IMPS transactions crossed INR 1000 billion in March 2018,  and stood at INR 1130.1 billion in June; PPIs that hit a roadblock in February with the tightening of KYC regulations have once again moved up - from the peak of INR 149.6 billion in February 2018, dipped to INR 118.8 billion in March and swung up again to INR 133.8 billion in April. The use of debit cards at PoS terminals are now at 30% of total use, a significant change from the 2016 levels of 15%. 

It is also true that despite the rise in use of digital payments, cash continues to remain the first choice for the majority of Indians, and this will only change slowly over time. As noted by Satyen Kothari (ET, June 28, 2018) the five fundamental reasons why consumers continue to stick to cash are : Lack of trust in the new digital way; Habit that continues to be comfortable; Lack of transaparency and anonymity in cash transactions; Pervasivenss in cash acceptance and Friction in digital infrastructure. However, there are clear benefits to the new digital mode of transactions - convenience, safety, easier tracking of personal records etc and the younger generation is expected to pick up on these cues faster than the older. 

Going ahead, the RBI is also focused on market structure as noted in the latest Statement on Developmental and Regulatory Policies (June 6, 2018), "The Reserve Bank plans to encourage more players to participate in and promote pan-India payment platforms so as to give a fillip to innovation and competition in the sector. A policy paper in this regard will be put out for public consultation by September 30, 2018."


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