Mapping India’s Digital Transactions | Trade Standard News

UPI is about to get bigger now, after the RBI introduced it in feature phones. Other digital transaction platforms are also growing. Learn about the changing landscape of virtual transactions

Topics
IPU | digital transactions | RBI


Ishaan Gera |
New Delhi



Last week, India’s central bank finally rolled out the Unified Payment Interface (UPI) for low-cost feature phones. With this decision, the RBI aims to bring at least 400 million people into the fold of the digital ecosystem. From now on, people who do not have a smartphone will be able to transfer money using the UPI function. The new feature is the third iteration of the Unstructured Supplementary Service Data service launched in 2016. The new feature is expected to onboard more users and help UPI cross the Rs 10 trillion monthly mark. The value of UPI transactions increased, but volumes grew faster. The need for the new service arose because despite the growth in transaction volume for digital payments, USSD service transactions were on the decline. In February, transactions worth Rs. 14 crore were made using the USSD service, which is well below the value of Rs. 21 crore reached in January 2019. USSD is a message-based service where a person can transact using a feature phone by dialing *99#. On the other hand, the growth of Immediate Payment Service or IMPS – another NPCI payment service – has been faster than National Electronic Funds Transfer or NEFT. The growth in value of IMPS transactions was almost 2.5 times greater than that of NEFT. IMPS transactions have grown by an average of 2.48% per month over the past 12 months, compared to 1.01% for NEFT, indicating a growing acceptance of faster money transfers. Trading volumes grew even faster than value. Now let’s see how the cards behaved.

Credit card usage on online channels was higher. While debit card usage at point-of-sale (PoS) has increased again, its share in online transactions has declined.

In November 2019, one out of two credit card transactions was carried out on PoS terminals; the ratio fell to just over one in three transactions. On the other hand, two out of three times, debit cards were used at point-of-sale terminals. Meanwhile, wallets have also made a comeback, with trading volumes on the rise. Wallet transactions were consistently above Rs 200 crore between October and December. Even though digital usage is increasing in absolute terms, analysis by Business Standard shows that digital transactions have declined as a proportion of gross domestic product. In 2018-2019, the ratio was 8.7. It fell to 8.1 in 2019-20. And in 2021-22, it is expected to drop further to 7.1. One of the reasons for the decline is the growing demand for cash. Another important reason is the absence of large ticket transactions during Covid. It therefore remains to be seen whether transactions will pick up again once the economic trajectory improves.

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First published: Wednesday, March 16, 2022. 08:30 IST

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