It’s official. The demonetisation drive by Prime Minister Narendra Modi on November 8 last year has crowned digital cash as the king of all payment instruments in India.
According to the RBI data for December 2016, digital wallet transactions grew almost four times in both value and volume terms compared to the year-ago period. There was also a sharp jump in mobile banking transactions.
The three months since demonetisation was notified on November 8 have seen the biggest jump in digital transactions.
“We have observed a phenomenal increase in awareness which has resulted in more acceptance across merchants and users. We are also witnessing increased interest from corporates so that their employees can avail themselves of the benefits of digitised payments,” said serial entrepreneur Bhavin Turakhia, who started digital payments player Zeta.
There has also been a spike in point of sales (PoS) terminals. While the number of PoS units saw a marginal rise from December 2015 (12.45 lakh units) to November 2016 (13.85 lakh), by the end of December 2016, it shot up to 17.05 lakh units.
“It is clear that the spike in digital transactions is driven by demonetisation. It also shows a forced change in the behaviour of people since they had no other option,” said Dewang Neralla, CEO and Founder of Atom Technologies, which provides PoS-based payment solutions to retailers.
He said the increased usage could also be due to seasonality factor, with tourism and weddings playing a major role in “forcibly” bring people on board the electronic payment ecosystem.
However, Sumit Sirsikar, Head of Marketing at Innoviti, said that while the company witnessed a 20 per cent decline in the usage of cards (credit/debit) compared to the December period, the spike compared to last year was 70 per cent.
He also added that the jump in credit/debit card usage in November-December 2016 was largely in tier-II/III towns and was skewed more towards small-ticket transactions in the ₹10-₹1,000 range, indicating that these towns witnessed several first-time card users.