Insights

Mumbai, 8 July 2019
by Ammar Sabilwala

“India has undoubtedly moved mountains in the payment’s arena”, tells my cab-driver, striking to begin a conversation with me, while I look out of the window and think about the day. I couldn’t agree further, remembering all the chores I did today.

The day began with calling a cab to work, using my smartphone and the ride had been prepaid using mobile wallet. Once I reached office, I ordered myself some salad from the nearest eatery and when the delivery guy arrived, I paid the bill scanning the restaurant’s static QR Code.  For lunch too, I went out with the team and paid the bill using a UPI app, to which again I clicked a picture of the bill and sent it to my colleagues on WhatsApp, who later transferred their share directly from their bank account to mine’s using the payment button on WhatsApp. And while I near my destination with the already pre-paid cab, I think to myself, as to how far we have come, in the payment’s arena.

Pre-demonetization in India, cashless India was a term way too fancy for a lot of us. But after the 8th of November 2016, the transition of India towards a cashless economy was steady and radical. With the abolishment of currency notes worth at value of Rs.500 and Rs.1000, the nation went frenzy. Having no other option but to surrender the currency note and swipe their cards for the most basic of transactions, led towards the evolution of India towards a cashless economy.

Although a majority of the population has embraced the digital change, it is time we penetrate deeper and change the likes of the population in rural India too towards Digital Payments and strive together for a cashless India.

Based on the data from the RBI- Reserve Bank of India, we see the following growth in India:

Digital payments by volume over last 5 years:

Digital payments by value over last 5 years:

Few facts and trivia that shows a change in trend towards cashless India:

• The demonetization decision left 22 billion pieces of currency notes in the denominations of Rs500 and Rs1,000 cancelled.

• On average, 1,381 ATMs were put up by the scheduled commercial banks across the country, every month.

• In August alone, people withdrew a total of Rs2,19,657 crores from the ATMs in comparison, during the same month, they transacted only Rs18,370 crores worth business over Point of Sale (PoS), using the same ATM/debit cards.

• India has reported 597 ATM’s less in 2019 than 2017, indicating the growth of a cashless India.

• According to the Reserve Bank of India’s (RBI) annual report for 2017-18, mobile banking services witnessed a growth of 92 percent and 13 percent in volume and value terms, respectively.

• The share of electronic transactions in the total volume of retail payments increased to 92.6 percent in 2017-18, up from 88.9 percent in the previous year.

• The Reserve Bank of India (RBI) in its annual report said all payment and settlement systems - NEFT, IMPS, UPI, NACH, card payments, Electronic Clearing Systems as well as Forex and market clearing systems – have seen a 44.6 percent increase in volume in 2017-18 and an 11.9 percent increase in the value of funds transferred.

• In the annual report, RBI also said that during the financial year 2016-17, the volume of transactions through digital payment systems witnessed a 56 percent increase, with the value of funds increasing by 24.8 percent.

• The RBI also said the share of paper-based clearing instruments reduced from 11.1 percent in 2016-17 to 7.4 percent in 2017-18, showing a strong trend in favor of digital payments.

• From FY16 to FY17, the total number of credit and debit cards grew by almost 29 percent, but this trend didn’t quite sustain in the next financial year. Card growth fell sharply in FY18, growing at 1.5 percent, with total physical cards in the country standing at almost 900 million.

• This can be attributed to the slow growth of debit cards post demonetization, which showed less than 1 percent growth between FY17 and FY18. Credit cards maintained an average 20 percent increase year-on-year.

• Debit card growth in the country is now back on track, having grown 13.6 percent as of August this financial year. As of August 2018, there were a total of 1.02 billion credit and debit cards in the country.

• Acceptance of digital infrastructure has grown since demonetization with the number of Point of Sale (POS) terminals increasing by 24 percent from 2.53 million in 2016-17 to 3.08 million in 2017-18, according to the RBI. During the same period, the number of ATMs deployed by banks witnessed a marginal decline from 222,475 to 222,247.

• The digital infrastructure still needs to expand as currently, for a total of 1.02 billion credit and debit cards in the country, there are only 3.3 million PoS devices and only 228,422 ATMs.

• That means for every 309 million cards in the country there is one PoS machine available as an acceptance point.

The future is digital

Over the last 24 months, India has witnessed an amazing shift in the digitization of payments. The number of merchants accepting card payments has more than doubled in the last two years to cross 3 million, and the number of UPI transactions almost touched 250 million in June 2018. Overall, the proportion of cash transactions in the total consumer spending in the country has come down from 78% in 2015 to 68% in 2017 (Source: Euromonitor).

The above statistics and the pace at which India is embracing Digital Payment, the day is not far where India would be amongst the top nationals of the world that preach Cashless! If you are a business and have still not gone Digital, the time has come. With Atom Technologies huge array of digital payment option and services, now take the world at your custody. India’s omni-channel payment service provider is here at your service. Do reach out to us at https://www.atomtech.in/