Digital Transactions in India
Government of India is committed to
expand digital transactions in the Indian economy, and there by enhance the
quality and strength of the financial sector, as well as ease of living for
citizens. Digital payment transactions have significantly increased as a
result of coordinated efforts of the Government as a whole, along with all
stake holders concerned, from 2,071 crore transactions in FY 2017-18 to 8,840
crore transactions in FY 2021-22 (Source: RBI, NPCI and banks).
During last five years, various easy and
convenient modes of digital payments, including Bharat Interface for
Money-Unified Payments Interface (BHIM-UPI), Immediate Payment Service (IMPS),
and National Electronic Toll Collection (NETC) have registered substantial
growth and have transformed digital payment ecosystem by increasing
person-to-person (P2P) as well as person-to-merchant (P2M) payments. BHIM UPI
has emerged as the preferred payment mode of the citizens and has recorded
803.6 crore digital payment transactions with the value of ₹ 12.98 lakh crore
in January 2023.
The total number of digital payment
transactions and the total value of digital
payments undertaken during the last five financial years and the current
financial year are as under:
|
Financial Year (FY) |
Financial Year Total number of Total
value of digital
transactions digital transactions (in lakh crores) |
|
2017-18 |
2017-2018 2,071 1,962 |
|
2018-19 |
2018- 2019 3,134 2,482 |
|
2019-20 |
2019-2020 4,572 2,953 |
|
2020-21 |
2020-2021 5,554 3,000 |
|
2021-22 |
2021-2022 8,840 3,021 |
|
2022-23 |
2022-2023
9,192* |
* Data
till 31st December2022 # Note:
Digital payment modes considered are BHIM-UPI, IMPS, NACH, AePS, NETC, debit
cards, credit cards, NEFT, RTGS, PPI and others.
Source:
RBI, NPCI and banks
Growth of Digital Payments in India and
availability of various easy and convenient digital payment solutions have
facilitated ease of living for citizens, financial inclusion, and growth of
business and economy. During the Pandemic, availability of contactless digital
payment solutions such as BHIM-UPI facilitated social distancing and continuity
of businesses, including small merchants. The benefits of using digital payments are as follows:
·
Instant
and convenient mode of payment: Unlike cash, money can be instantaneously
transferred to the beneficiary account using digital modes like BHIM-UPI and
IMPS. Moreover, using the BHIM-UPI mode, one can effect a digital transaction
via mobile phone using mobile number or easy-to-remember virtual payment
address (email-like address). BHIM-UPI has enabled access to multiple Bank
accounts in a single mobile app, facilitating ease of payments.
·
Enhanced
financial inclusion:
Digital payments offer anytime, anywhere access to accounts, thus making it
easy for citizens to receive payments in their accounts and to also make
payments using their phone. People who may have been deterred by the time, and
travelling cost involved in physically accessing a bank outlet for transactions
can now conveniently access the bank account digitally and get various benefits
of being part of the formal banking system and becoming financially included.
Recently launched UPI 123PAYenables feature phone users to make digital
transactions through UPI in assisted voice mode, facilitating digital
transactions and financial inclusion in rural areas.
·
Increased
transparency in government system: Earlier cash payments were subject to “leakage”
(payments that do not reach the recipient in full) and “ghost” (fake)
recipients, particularly in the context of social security benefits by
government transfers. Now, benefits are directly transferred to target
beneficiary (direct benefit transfer) account through digital modes of
payments.
·
Improved
speed and timely delivery: In contrast to a cash payment that travels at the speed
of its carrier, digital payments can be virtually instantaneous, regardless of
whether the sender and receiver are in the same town, district or country.
·
National
Electronic Toll Collection (NETC) system: NETC system enables the
customer to make electronic payments at NETC-enabled toll plazas on the highway
without stopping at the toll, using Radio Frequency Identification technology.
·
Bharat
Bill Payment System: Bharat Bill Payment System (BBPS) provides an interoperable
and easily accessible bill payment service to consumers via multiple channels
like Internet banking, mobile banking, mobile apps, BHIM-UPI etc.
Citizens can make easy bill payments anytime, anywhere through BBPS.
·
Enhanced
Credit Access: Unlike cash payments, digital payments automatically
establish a user’s financial footprint, thereby increasing access to formal
financial services, including credit. Banks and other lending institutions can
utilise digital transaction histories to take cashflow-based lending decisions
for both retail lending and lending to businesses, including small businesses
who may face difficulty in getting credit in the absence of verifiable
cashflows.
· Safe and secure: Recipients of cash payments not only often have to travel considerable distances to receive their payments but are also particularly vulnerable to theft. Digital payments across India are secure as multiple levels of authentication are required for making transactions.
In In FY2021-22, 8,840 crore Digital payments Transactions were achieved with 87.20% Bengaluru topped the list of Cities in India for highest digital transactions accounting for 29million trassactions worthrs.6500 crore in 2022 asper data released by Worldline a French payment and transactional Services firm.
In In conclusion, the digital payment ecosystem in India has grown significantly in recent years driven by government initiatives an increase in internet and smartphones penetration and the rise of e commerce.
***
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