Digital payments have gained strong traction despite the Covid-led crisis and economic slowdown though growth in terms of volume has far outstripped expansion by value in recent months.

Experts say cashbacks have proven to be a big incentive, especially in popularising the use of UPI that has breached the 200-crore mark for transactions while concerns over job losses and salary cuts have also limited spending per consumer.

Data by the National Payments Corporation of India shows that barring April when the national lockdown was in full effect, digital payments through all modes, including UPI, Immediate Payment Service, Bharat BillPay, have grown rapidly.

Digital drive

A mix of social distancing, pent-up demand, festival season and now the wedding season are fuelling customer spends, a large part of which is slowly moving to digital channels.

However, the growth in volume of transactions seems to be higher than that in value terms for UPI in November compared to October. The number of transactions increased on Bharat BillPay and FASTags too, but total value transacted, declined in November, sequentially.

UPI transactions in November stood at an all-time high of 221 crore transactions and processed ₹3.9- lakh crore worth of payments, registering a monthly increase over October by 6.69 per cent and 1.27 per cent, respectively. On a year-on-year basis, UPI payments in November increased by 81.35 per cent in volume and 106.6 per cent in value.

“The surge in volumes is driven by festival offers presented by several e-commerce companies. In addition, new to market programs such as buy-now-pay-later, wherein consumers can buy an item and choose options to pay over period of time have driven digital payment transactions,” said Mahesh Ramamoorthy, MD-Banking Solutions, International Market, APAC, FIS, adding that the transactions that are usually accompanied by cash-backs and loyalty points are also driving incentive-based buying behaviour for the Indian tech-savvy youth.

“Many of these UPI transactions are very small ticket in nature and it is expected that a large portion of these are for getting cashbacks and reward points,” noted a banker who did not wish to be named.

Bright future

However, Mandar Agashe, Sarvatra Technologies, Founder, MD and Vice-Chairman, believes that the consistent, steady rise of UPI is a clear indication that the population is now gradually becoming comfortable with digital transactions. “Today investors seamless apply for IPOs through UPI, similarly e-mandate for recurring payments of up to ₹2,000 have helped drive consumption in a big way,” he said.

However, all agree that the future for digital payments continues to be bright. A recent report by Accenture estimated that in India, 6,660 crore transactions worth $270.7 billion are expected to shift from cash to cards and digital payments by 2023 – and increase to $856.6 billion by 2030.

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