Demonetisation impact: Three years of digital payments growth achieved in seven months?
Demonetisation has led to higher digital transactions in India which has pushed the country to leapfrog into the future in terms of electronic payments.
- India is currently 3 years ahead of its time in terms of digital payments.
- PoS transactions stood at Rs 73600 crore in May.
- Increased digital payments may even lower inflation.
If demonetisation had not happened to India in November 2016, it would have taken three years for India to reach current levels of digital transactions, a report by State Bank of India (SBI) said on Thursday.
“If demonetisation had not happened, it would have taken 3-years more for credit and debit cards transactions on PoS terminals to reach the current level of Rs 700 billion (assuming a yearly growth rate of 25%),” Soumya Kanti Ghosh, analyst of SBI said.
The report cited point of sales (PoS) terminal transactions which have crossed Rs 70,000 crore.
Prepaid instruments like m-Wallet, PPI cards, and paper vouchers and mobile banking have also seen a jump in terms of non-cash transactions.
“PPI witnessed a sharp growth with transactions value worth Rs 107 billion in May’17 compared to Rs 51 billion (Rs 5100 crore) in Nov’16,” the report said.
In May the PPI transactions value stood at Rs 10,700 crore while PoS transactions was at Rs 73,600 crore.
The value of these transactions had dipped in the month of February to Rs 9600 crore and Rs 64500 crore respectively which reports condoned as ‘seasonal.’
“We believe that increasing number of PoS terminals (post demonetization India banks have been able to set-up 11.8 lakh extra PoS terminals) and ease of doing digital transaction will increase this level further,” the report said.
Further it added that increased transactions via digital mode will even bring down inflation.
“The estimated model was statistically significant and the results indicate an increase in Rs 100 billion transaction by credit + debit cards at PoS terminals will lead to around 1.1% decline in CPI inflation, ceteris paribus,” the report said.