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Digital payments rise at 55% CAGR vy volume in five years to FY20: RBI data

By value, they have grown from Rs 920.38 trillion to Rs 1,623.05 trillion, clipping at a CAGR of 15.2%

Digital Payments | Online transaction | Credit cards

Press Trust of India  |  Mumbai 

UPI's value grew 700% in 2018 while total digital payments fell 1%

Concerted efforts by the Reserve Bank to move to a non/less-cash economy by pushing have begun to pay rich dividends as the volume of such payments has jumped manifold in the past five years, the latest data from the central bank showed.

Between 2015-16 and 2019-20, digital payment volumes have grown at a compounded annual growth rate of 55.1 per cent - from 5.93 billion transactions in the year to March 2016 to 34.35 billion transactions in the year to March 2020.

In value terms, they have grown from Rs 920.38 trillion to Rs 1,623.05 trillion during this period, clipping at an annual compounded rate of 15.2 per cent.

Giving a year-wise data, in 2016-17 jumped to 9.69 billion transactions from 5.93 billion transactions in the previous year in volume terms, while in value the same rose to Rs 1,120.99 trillion.

Similarly, the numbers continued to scale new peaks with volume growing to 1,4.59  billion transactions and value jumping to Rs 1,369.86 trillion in 2017-18.

Come 2018-19, the numbers clipped at a faster pace with volume jumping to 2,3.43 billion transactions while the value rose to Rs 1,638.52 trillion.

However, FY20 saw a massive spike in volumes over the previous year to 3,4.34 billion transactions but in value slipped down to Rs 1,623.05 trillion, which can be attributed to the steep fall in the overall economy and the massive job losses, forcing people to spend less and preserve more cash.

Yet from a five-year growth perspective, the numbers shine with an annual growth rate of 55.1 per cent in terms of transaction volumes and 15.2 per cent in terms of value, show the data.

Given the pandemic and the lockdown restrictions, volumes are set to jump manifold while the value could see a further plunge given the mammoth crisis that everyone faces following the pandemic.

Digital payment push started almost a decade back with limited access to NEFT, RTGS and ECS payments. Later with the government push following the controversial note ban, digital payments rose sharply.

The development of UPI-based payments as well as app-based payments just pushed the boundaries and has since witnessed blossoming of a myriad of payment systems, entry of non-bank players, and a gradual shift in the customer behaviour from cash to digital payments.

Behind all these, the Reserve Bank has played the crucial role of an operator, catalyst and facilitator, regulator and supervisor, as the occasion demanded towards achieving its public policy objective of developing and promoting a safe, secure, sound and efficient payment systems.

Some of the initiatives introduced decades ago in payment systems to safeguard the interests of customers are valid even today.

Some of the recent initiatives for enhancing security and increase customer confidence in digital payments include mandating use of only EMV chip and PIN-based debit and from January 2019; tokenisation from January 2019, when issued a framework for tokenisation of card transactions which allowed all authorised card networks to offer tokenisation services, irrespective of the app provider, use case; facility to switch on/off transaction rights; mandatory positive confirmation to remove any ambiguity for funds transferred through NEFT and RTGS from March 2010, and January 2019, respectively.

Another innovation has been contactless cards which allows cardholders to tap and go; mandatory data storage within the country; harmonisation of turnaround time for failed transactions from September 2019 and setting up of a digital ombudsman and also institution of the Central Payment Frauds Information Registry among others.

One of the biggest outcomes of these measures is the massive change in the behavioural trends of customers-for instance, as percent of card usage, they are being used increasingly for payments--from 20 per cent in FY16 to 45 per cent in FY20, with debit card turnover outpacing credit card values.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Sun, October 11 2020. 17:49 IST