Owing to demonetisation and initiatives to promote card transactions on point of sales (PoS) terminals, card and digital transactions have increased stupendously post November 2016.
After analysing data for PoS sales and digital transactions, it appears that demonetisation has brought India at least three years ahead in digital payments, says a research note.
In the report, State Bank of India (SBI) said that if demonetisation had not happened, it would have taken three years more for credit plus debit cards transactions on PoS terminals to reach the current level of Rs70,000 crore, assuming a yearly growth rate of 25 percent.
Post demonetisation, Indian banks have been able to set up 11.8 lakh extra PoS terminals. We believe that increasing number of PoS terminals and ease of doing digital transaction will increase this level further.
According to the report, similar trends are observed in case of usage of pre-paid instruments, including m-Wallet, PPI cards, and paper vouchers and mobile banking too. Prepaid payment instruments (PPIs) witnessed a sharp growth, with transactions worth Rs 10,700 crore in May 2017, compared to Rs 5,100 crore in November 2016.
Seven months after demonetisation, the transaction value is quite large and approximately double of what it had been in the corresponding month and period last year, the report says.
SBI feels that such digitisation will result in lower inflation. SBI estimated a simple regression model by taking headline consumer price index (CPI) inflation as dependent variable and credit plus debit cards transactions on PoS terminals in rupees billion (DCPoS) as independent variable.
By Baishakhi Dutta
