Government likely to meet FY19 digital payments target
Optimism is also buoyed by the higher adoption of digital payments during the festive season sales in October and November, industry executives.
The number of digital transactions stood at about 11.8 billion for the first six months of this financial year, according to calculations based on data from the Reserve Bank of India and the National Payments Corporation of India.
The data covers payment modes such as cards, immediate payment service (IMPS), prepaid wallets, Unified Payments Interface (UPI), National Automated Clearing House (NACH) and Aadhaar Enabled Payment System (AePS).
Although the figure at the halfway mark is about 39% of the target, bankers and industry executives said it could be achieved by the end of the year with new forms of digital payments evolving and the entry of more players.
“A few trends around higher number of merchants being acquired for offline digital payments, adoption of national mobility card for toll and transit payments and further push on UPI through WhatsApp and Google show that going forward, the digital payments adoption is only going to increase,” said Vivek Belgavi, fintech leader at PwC India.
Optimism is also buoyed by the higher adoption of digital payments during the festive season sales in October and November, industry executives told ET. Data for these two months is yet to be officially released.
“In terms of the total value of payments on our platform during those few days, three-fourths of the transactions happened digitally, which is 10 percentage points higher than last year,” Vikas Bansal, head, emerging payments at Amazon Pay, told ET in October.
Card swipes at point of sales terminals dominated the non-cash payment segment until September. Debit and credit card transactions stood at about 2.9 billion, followed by mobile wallets at about 2.1 billion and UPI at 1.5 billion.
“Digital transactions alone have seen a growth of 35% in the first half of the financial year,” said Ritesh Pai, chief digital officer at Yes Bank. “Half of this growth has been driven by emerging payment systems such as UPI and IMPS. The usage of digital channels, especially mobile banking, has also grown 33% in the last six months, while debit card usage has increased 11.5%.”
ET reported in its April 25 edition that the government had set separate targets for banks and wallet companies to achieve the 30 billion target. Wallets had a target of 6.3 billion digital transactions, while banks were expected to pitch in with the remaining 23.7 billion.
AePS recorded more than 1 billion transactions in the April-September period. “AePS will be the future of digital transactions, especially in the rural and far-flung areas, and its adoption will only grow from here, mainly driven by demand for transactions from DBT (direct benefit transfer) accounts,” said Anand Kumar Bajaj, chief executive officer of Nearby Technologies, which deploys micro-ATMs for banks.
About 20.3 billion digital payment transactions were made in the previous financial year against the government’s target of 25 billion, ET reported in April.
Even with the steady growth of digital payment modes, key challenges are stalling their wider adoption in the country.
Digital continues to be in a weaker position vis-a-vis cash, which doesn’t attract know-your-customer requirements for transactions less than Rs 50,000 and has no direct cost to merchants or consumers, said payments veteran Naveen Surya, who is chairman of the Fintech Convergence Council, an industry body under the Internet and Mobile Association of India. “Still, we can expect retail digital payment growth over the next three years in the range of 35% to 45%, better than the current range of 20% to 35%,” Surya said.