Chennai: Volume of retail electronic payment transactions in the country in 2018-19 saw an accelerated growth rate of 95 per cent, a Reserve Bank of India (RBI) report said.
RBI’s “Benchmarking India’s Payment Systems” report stated that earlier, the growth rates were 71 per cent in 2015-16, 65 per cent in 2016-17 and 51 per cent in 2017-18.
The high growth in FY19 was largely due to steep growth in Unified Payments Interface (UPI), the report said. “Card (debit and credit) payment is an important payment instrument which has replaced the use of cash at least in retail outlets and e-commerce sites,” it added.
The volume of credit card transactions at PoS (point of sale) terminals and online was 1,762.59 million, valued at Rs 6.03 lakh crore, in FY19. In the case of debit cards, there were 4,414.28 transactions valued at Rs 5.93 lakh crore.
‘Despite the cost of digital transactions, the volume of payment transactions in India grew strongly and steadily at a compounded annual rate of over 40 per cent after 2012 and 2017, showing an appetite for modes of payment other than cash,’ the report stated.
Prepared by the RBI’s Department of Payment and Settlement Systems, the report said, payment system transactions in 2017 grew by 44.8 per cent over the previous year. It showed that non-cash payments were slowly becoming a habit for the users, also demonstrated by the growth of 54.3 per cent in FY19 over the previous fiscal.
“The cost of digital transactions is an inhibiting factor for the growth of digital transactions. Merchants have to cash out or transfer to their bank accounts at a cost and at times these costs are passed on to the consumer,” it said.
“An interesting fact is that while the debit cards issued were 861.70 million, as per the socio-economic profile only 33 per cent of the population reported having a debit card in 2017. This could be because of some persons having multiple cards and others none. In credit cards, while the growth is strong and better than all the benchmarked countries, there is still a lot of catching up to do so far as total number of cards is concerned,” the central bank said.
The report stated India’s debit and credit card payments is 0.5 times the cash in circulation; one of the lowest ratios amongst the benchmarked nations, which include Japan, South Africa, Germany, China and several other countries.
“The result is a combination of India having high levels of cash and low card usage. Indonesia and Japan have ratios comparable with that of India. It may be noted that the level of credit card penetration in India is low when compared to advanced countries,” the report said.