India’s digital payment system is booming. Exactly, five years since the demonetisation exercise took place—a move that wiped out the then existing high value currency notes of Rs 500 and Rs 1000 to curb use of black money and promote electronic transactions, it is the ongoing Covid 19 pandemic that has finally pushed India’s dependence on digital payments though cash circulation has continued simultaneously.
People have used various online payment options including net banking, mobile wallets, mobile banking, Unified Payment Interface (UPI) and even plastic money among others.
In 2020, India, which has been laying emphasis on “faceless, paperless, cashless” as the main plank of the Digital India programme, overtook China in usage of online transactions.
According to a study by ACI Worlwide, India topped the global list of real time payment transactions with 25.5 billion. followed by China which recorded 15.7 billion dealings.
South Korea recorded 6 billion real time transactions while Thailand had 5.2 billion in 2020. The US had 1.2 billion transactions.
“India’s journey of creating a digital financial infrastructure has been characterized by collaboration between the government, the regulator, banks, and fintechs. This has helped to advance the country’s goal of enabling financial inclusion and also provided rapid payments digitization for citizens,” Kaushik Roy, VP and head of product management, Asia, ME and Africa, ACI Worldwide has said in a statement earlier.
Banking industry sources told India Narrative that online transactions are no more restricted to the metros and the big cities. “Now we see a surge in use of digital transactions even from the smaller towns, which was not the case earlier,” said a senior executive at a large private sector bank.
The Payments and Settlements Data released by the RBI in its Annual Report, revealed that the total digital payments volume increased to 98.5 per cent in 2020-21 compared to 92.5 per cent registered during 2017-18.