Demonetization and Aadhaar Led to Growth in Digital Payments: RBI
Jun. 11, 2019Transactions in which both the payer and the payee use digital modes to send and receive money are referred to as digital or electronic payments.
India recordedan accelerated growth rate of over 50 per cent in the volume of retail electronic payment transactionsin the last four years, said the report titled “Benchmarking India’s Payment Systems”.
“In India, the smartphone revolution has seen an explosion in digital payment options, from e-Money to the Unified Payments Interface (UPI) to a combination of the two. After demonetisation, the use of e-Money picked up on a very large scale,”the findings showed.
However, the study showed that the cost of digital transactions was a factor inhibiting their growth. Merchants have to cash out or transfer to their banks accounts at a cost and at times these costs are passed on to the consumer.
“A few countries have tried to regulate costs to ensure that the charges are not usurious, but the jury is still out on whether such a regulation promotes the growth of digital payments. With banks pushing and merchants pulling, it isn’t clear if such caps will discourage the use of cash,”the report added.
