MUMBAI: The growth in cashless transactions, doubling in the aftermath of demonetisation, seems to have hit a new normal of 27 per cent in May and June.
By the time this financial year draws to a close, growth in digital modes of payment may stabilise at 30 per cent to 40 per cent higher than last year, say industry experts.
The currency ban widened the use of debit cards. The average value of card payments fell drastically, showing that they were used even for small value purchases. Although monthly volumes varied, transactions on a day-to-day basis have remained steady even after March.
According to RBI data, debit card usage at points of sale more than doubled to 400 million-plus transactions at the height of the cash crunch in December from 140 million in October. That number fell in February to 250 million and has stabilised around 268 million in April.
“Card spending on SBI PoS (points of sale) terminals has increased more than four fold from the pre-demonetisation period. It had reached six-fold in December, but has tapered a bit from then,” said Manju Agrawal, deputy MD, corporate strategy and new business, State Bank of India. SBI deployed more than 50,000 terminals since March.
This has fallen as RBI said that the top eight wallets reported 80 million payments for goods and services in June against 90 million in March. “In a few traditional markets such as Chandni Chowk and Sadar Bazaar, we have seen that digital transactions have come down after cash supplies eased. Middle-class localities and professionals have stuck to digital payments,” said Vineet Singh, chief business officer at Mobikwik.
“An event like demonetisation will not happen again, and we have to design innovative products to get more people to pay digitally.” While challenges stacked up for card and wallet payments, Unified Payments Interface has shown promise, having grown to 10 million transactions in June against 2 million in December. UPI was launched only last August and was adopted by the likes of SBI and HDFC Bank only toward the end of 2016.