Cash is back; efforts on to push digital, says NPCI DIGITAL DRIVE
The National Payments Corporation of India (NPCI), the designated agency to drive digital payments, has admitted that cash had returned from the low point it had touched after demonetisation. At the same time, digital transactions had failed to meet the targeted 6 billion in the June quarter.
Prime Minister Narendra Modi had announced the demonetisation of old ~500 and ~1,000 notes on November 8 last year, sucking out about ~15.4 lakh crore from the economy. There had been a spike in digital transactions in the months immediately following the currency purge.
“It is true that during demonetisation the volume (of digital payments) grew substantially. During December 2016 and January 2017 it peaked; then it came down in February and March, but started growing again in May and June. Even then, the volume is still lower than what it was December and January,” said A P Hota, managing director, NPCI, on Monday.
He added, “Cash is definitely back, but that’s why redoubling efforts (to push digital transactions) is necessary.”
The government has set a target of processing 25 billion digital transactions for 2017-18. In the first quarter, about a billion transactions were done each month. In the previous fiscal year (FY17), India had logged 10.2 billion transactions. Sources in the government said demonetisation would help the market grow by over two and a half times.
The NPCI provides nine financial services; it has been mandated to grow from 3.6 billion transactions last year to 11 billion this year. The balance will be powered by digital wallets — the government wants these grow from 1.6 billion transactions to 3.6 billion transactions and debit
The NPCI provides nine financial services; it has been mandated to grow from 3.6 billion transactions last year to 11 billion this year The balance will be powered by digital wallets — the government wants these grow from 1.6 billion transactions to 3.6 billion transactions and debit cards (excluding RuPay) to grow from 3.2 billion to 8 billion transactions
cards (excluding RuPay) to grow from 3.2 billion to 8 billion transactions.
The government is bullish in getting all parties to push for digital payments, including banks, that had initially showed some resistance to adopting new technologies. The government is also banking on the adoption of Unified Payments Interface (UPI), Aadhaar Pay and Bharat QR code to enable digital transactions even without the presence of point-of-sale machines or smartphones.
“The transactions will happen from all the banks or the wallet companies, so individual targets have been given to the banks and the wallet companies. The government is tracking on a fortnightly basis with each of the banks as to what are they doing,” added Hota.
Global players such as Google, Facebook and WhatsApp have shown interest in offering fintech (financial technology) solutions to their customers in the country through UPI, but they’ve only now reached the approval stage. The NPCI has written to the Reserve Bank of India (RBI) seeking Google’s permission to enable UPI-based transactions just two to three days ago.
While these players already have hundreds of millions of users in the country, their entry could spell doom for local players and they could even compete with banks themselves. It is for this reason the RBI will have to take a holistic view about granting them approvals to function in the space, said Hota, even though bringing them in will boost digital payments.