The impact of government and industry-wide uproar to go cashless and focus on digital payments has now started showing its result. The latest report by the Reserve Bank of India shows that the value of digital payments to GDP increased from 660% in 2014-15 to 862% in 2018- 19.
“A comparison with other CPMI countries shows that India is among the few countries like Argentina, Brazil, China, South Korea, Turkey and UK where the value of digital payments as a percentage of GDP has increased,” it noted.
In comparison, the value of cash withdrawals at ATMs to GDP has remained constant in India at around 17% except during the demonetisation period when it fell to 15%.
The central bank has noted that fintech innovations are making domestic payments increasingly convenient, instantaneous and ubiquitous. “More options are available to consumers and this is making it more convenient for them to use digital payments,” it noted.
RBI has also noted that overall, the digital payments in the country have witnessed a CAGR of 61% and 19% in terms of volume and value, respectively over the past five years, demonstrating a steep shift towards digital payments.
Under this, retail electronic payments comprising credit transfers [RTGS, NEFT, fast payments (IMPS and UPI)] and direct debits (ECS, NACH) have shown a rapid growth at a CAGR of 65% and 42% in terms of volume and value, respectively.
“Stored value cash issued in the form of wallets and prepaid cards demonstrated an increased adoption with a CAGR of 96% and 78% in terms of volume and value, respectively,” the apex bank noted.
Citing IAMAI, the central bank said that as on end November 2019, there were over 64.2 Cr and 1.9 Cr wireless and wireline broadband subscribers, respectively across the country. It also highlighted the growth of QR codes and point-of-sale (PoS) terminals. It noted that as on November 30, 2019, over 16 Mn payment QR codes (Bharat QR as well as proprietary QRs of other payment system operators) were deployed.
The deployment of QR codes is expected to increase substantially in the coming years, along with physical PoS terminals. Further, it said that a committee has been constituted by the Reserve Bank to examine, review and finalise a pan-India, interoperable QR code structure.
In terms of PoS, as on December 2019, there were around 49 lakh PoS terminals across the country. The PoS terminals across the country have grown at a CAGR of 35% over the past five years.
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.