Digital payment index for March rises to 270.59, indicating rapid adoption

Digital transactions grew steadily throughout FY21, retail payments like UPI, IMPS and NACH showed resilience and healthy growth

The Reserve Bank of India’s (RBI) digital payments index (DPI), which was launched in January to indicate the extent of digitisation of payments across the country, shows the index for March 2021 stood at 270.59 as against 207.94 of March 2020, thus signifying the rapid adoption of digital payments in the country since the onset of the pandemic.

“The RBI-DPI index has demonstrated significant growth in the index representing the rapid adoption and deepening of digital payments across the country in recent years," the central bank said in a statement on Wednesday.

In March 2019 the index stood at 153.47 and by September 2019, it rose to 173.49, followed by 207.94 in March 2020, and 217.74 in September 2020. RBI has said the index will be published on a semi-annual basis with a lag of 4 months. The RBI-DPI has been constructed with March 2018 as the base period, i.e. DPI score for March 2018 is set at 100.

The DPI index is comprised of five broad parameters that enable the measurement of deepening and penetration of digital payments in the country over different time periods. The parameters include payment enablers, with a weightage of 25 per cent in the index, followed by demand-side and supply-side payment infrastructure factors, with a weightage of 10 per cent each, payment performance, with 45 per cent weightage, and consumer centricity, with 5 per cent weightage. Each of the parameters have sub-parameters which, in turn, consist of various measurable indicators.

Throughout 2020-21, digital transactions maintained a steady growth momentum. Further, digital retail payments like the Unified Payments Interface (UPI), Immediate Payment Service (IMPS), National Automated Clearing House (NACH), Bharat Bill Payments System (BBPS), and National Electronic Toll Collection (NETC) exhibited resilience and demonstrated healthy growth. In fact, there was a near doubling of both transaction volume from 12.5 billion to 22.3 billion and value from Rs 21.3 trillion to Rs 41 trillion between FY20 and 21.

Experts have pointed out that the Covid19 has accelerated digital payment adoption in the country by 5-10 years.

Despite the second wave of the pandemic, the digital payment ecosystem has remained resilient, thereby sustaining a healthy expansion. According to RBI’s July bulletin, daily average transactions across major payment modes, viz., the Real Time Gross Settlement (RTGS), National Electronic Funds Transfer (NEFT), UPI, IMPS, and NETC have rebounded after a brief moderation, in tandem with the resumption of consumer and business activities. In fact, UPI hit an all-time high of 2.8 billion transactions, worth Rs 5.47 trillion.