Three years after demonetisation, a lot might not have changed in the country but the digital payments industry has seen a major revolution. Highlighting the same, the Reserve Bank of India (RBI), on Friday (November 8), said that digital payments have grown at a compounded annual growth rate (CAGR) of 61% over the past three years in terms of volume.
In terms of value, the CAGR stands at 39% during the same period. The RBI said that digital payments constituted a high 96% of total non-cash retail payments during the period of October 2018 to September 2019.
The details showed that the volume of retail digital transactions has grown from around 6.8 Bn to 28.46 Bn between 2015 and 2019 amounting to transactions worth INR 113 lakh crore and INR 302 lakh crore, respectively.
It said that during the same period, the National Electronic Funds Transfer (NEFT) and Unified Payments Interface (UPI) systems handled 2.5 Bn and 8.74 Bn transactions with year on year growth of 20% and 263%, respectively.
The apex bank also emphasised that this rapid growth in the payment systems, inter-alia, has been facilitated by a series of measures taken by it. Initially, in the 2017-18 budget, India’s former finance minister Arun Jaitley had set the goal of 25 Bn digital transactions in the country. This was followed by the MeitY’s 2018 letter to the banks, which had aimed for 30 Bn digital transactions in the country by the end of FY 2019.
India is expected to clock the fastest growth in digital payments in terms of transaction value between 2019 and 2023 with a compounded annual growth of 20.2%, according to an Assocham-PWC India study. It said that the exponential rise in online transactions is due to the dual factors of demonetisation and discounts through digital payment options on ecommerce platforms.
According to RBI’s payment and settlement systems in India Vision 2019-2021, there will be accelerated growth in individual retail electronic payment systems, both in terms of the number of transactions and increased availability.
Payment systems such as UPI/IMPS are likely to register average annualised growth of more than 100% and NEFT at 40% over the vision period. The RBI also expects the number of digital transactions to quadruple from 2069 Cr in December 2018 to 8707 Cr in December 2021.
To further accentuate this growth, the RBI plans to:
- Mandate banks not to charge savings bank account customers for online transactions in the NEFT system with effect from January 2020.
- Operationalise the Acceptance Development Fund to increase acceptance infrastructure with effect from January 1, 2020.
- Constitute a Committee to assess the need for a plurality of QR codes and the merits of their co-existence or convergence from both systemic and consumer viewpoints.
- Permit all authorised payment systems and instruments (non-bank PPIs, cards and UPI) for linking with National Electronic Toll Collection (NETC) FASTags. Going forward, this will facilitate the use of FASTags for parking, fuel, etc, payments in an interoperable environment.
- Enable processing of e-mandates for transactions through UPI.