RBI Launches Digital Payments Index To Track Cashless Economy Growth

RBI Launches Digital Payments Index (DPI) To Monitor Digital Payments In India

SUMMARY

The Digital Payments Index (DPI) went live on January 1, 2021 as a measure to keep a check on digital payments penetration in India

Payment enablers, payment infra (supply and demand), payment performance and consumer centricity will be measured

For the DPI, the RBI has set the base year as of March 2018

To boost the adoption of digital payments across the country and map the penetration of the cashless economy, the Reserve Bank of India (RBI) recently announced the launch of a Digital Payments Index (DPI) with the start of the new year.

Accordingly, RBI will be capturing the penetration of digital payments, which includes payment enablers, payment infrastructure — demand-supply aspects, alongside payment performance and consumer centricity. Furthermore, the RBI has set the base year for DPI at 100 as of March 2018. Since the adoption and use of digital payments have increased significantly in the recent past, the RBI’s DPI as of March 2020 DPI has reached a score of 207.84, compared to 153.47, a year ago.

How RBI’s Digital Payments Index Is Measured

The RBI, in a press statement, stated that the DPI will be tracked based on following parameters, including payment enablers, including mobile, internet, Aadhar, bank accounts, participants and merchants. This constitutes over 25% of the overall index.

In the case of payment infrastructure, RBI said that it will be taking into account, both the demand and supply factors. Demand-side aspects are said to account for 10% (FASTag, debit card, credit cards, mobile and internet banking among others) of the index score. On the other hand, supply-side of the payment infrastructure like bank branches, ATMs, PoS machines, QR codes, etc, will account for 15% of total DPI score.

The major weightage is given to payment performance at 45%. RBI will be taking into consideration various metrics like payment value, unique users, currency in circulation and cash withdrawals, followed by consumer centricity which constitute 5% weight in the index score through digital payments awareness, education, declines, complaints, downtime and fraud redressal.

RBI had stated that it will be launching the DPI in July 2020, however, the framework for the index was only released on January 1, 2021.

At the time, RBI Governor Shaktikanta Das had said: “Digital payments in India have been growing rapidly. The Reserve Bank shall construct and periodically publish a composite DPI to capture the extent of digitisation of payments effectively.”