As currency in the public hands continues to increase, a lot of new adopters of digital payment systems have returned to cash. Less than half the customers who chose digital payment options during demonetisation continue to use them, said a senior official at the National Payments Corporation of India (NPCI).
As per Livemint, the total number of new digital payment users in banking went up from around 40 million to 100 million in the first two months after the government invalidated 86 per cent of the country’s currency in circulation on 8 November. Now, three months after the exercise has ended, only 25 million have stuck around, according to Dilip Asbe, chief operating officer at NPCI.
As on 7 April, currency in circulation stood at Rs 13.6 trillion compared to Rs 17.97 trillion on 4 November. It had dropped to a low of Rs 8.98 trillion as on 6 January following the note ban.
Throughout November and December, various digital payments modes such as national electronic funds transfer (NEFT), immediate payment service (IMPS), mobile banking, UPI and mobile wallets all saw a significant jump in the volume and value of transactions made.
However, by February, as the cash started returning to the system, this momentum slowed and transactions started dipping. In March, RBI data showed a total of 893.9 million transactions; though this was an improvement from February figures, it was still below the 957.5 million peak reached in December. However, the value of these transactions reached Rs 149 trillion—boosted partly by increased real-time gross settlement (RTGS) and NEFT transactions for advance tax payments—well above the previous peak of Rs 104 trillion in December.
NPCI, on its part, has been pushing new means of digital payment systems. In March, it introduced UPI for merchants as a means to increase the usage of such payments. In a tie up with Reliance Retail and Innoviti, NPCI allowed customers to pay using UPI applications of any bank by scanning a dynamic QR code on point of sale (PoS) terminals. At the time A.P. Hota, managing director and chief executive officer of NPCI, had said that the payments system provider is looking to bring in more merchants on board.
