E-transactions to dominate volumes over non-cash ones in next three years

The contribution of e-channels to overall non-cash transaction volumes grew from 15% in 2003-04 to 50% two years ago

With electronic transactions gaining popularity among Indian consumers, the share of e-transactions in non-cash transaction volumes could touch 90 per cent over the next three-to-five years, HSBC-BCG said in its report on emerging payment infrastructure in India.

The contribution of electronic channels to overall non-cash transaction volumes grew from 15 per cent in 2003-04 to 50 per cent two years ago. The current level remains at 50 per cent.

“It took India eight years to get from 15 per cent to 50 per cent of all formal transactions being made electronically. The jump to 90 per cent is likely to be faster with access to world-class infrastructure,” said the report, which is yet to be formally released.

The report noted that the initial adoption by corporate India resulted in a large upsurge in the throughput. “From 2007-08 onwards, there has been a change in behaviour that is evident through the uptake. Individuals using electronic channels is indicative of a change in consumer behaviour,” it added.

Currently, close to 98 per cent of electronic transactions in terms of value are made using RTGS (real-time gross settlement), 1.6 per cent using NEFT (national electronic funds transfer) and the remaining through other channels.

While cheques still constitute over 50 per cent of total payments volume in India, in the past four years, there has been a downward trend in both value and volume of transactions made using cheques.

“Sectors such as mutual funds and finance companies will see a strong uptake in electronic payments in the next three years with the ACH (automatic clearing house) infrastructure being introduced. With cheque clearing becoming more efficient and thereby resulting in faster clearing of cheques, we will also see dealers and distributors across various industries — FMCG (fast moving consumer goods), consumer durables, etc — moving to the electronic channel,” said the report.