After the demonetisation of Rs 500 and Rs 1000 notes in 2016 pushed digital payments, Aadhaar-enabled electronic know your customer (eKYC) resulted in an exponential growth of such payments in the country, according to a new report by the Reserve Bank of India.
Transactions in which both the payer and the payee usedigital modes to send and receive money are referred to as digital orelectronic payments.
India recorded an accelerated growth rate of over 50 percent in the volume of retail electronic payment transactions in the last fouryears, said the report titled "Benchmarking India's Payment Systems".
The growth in 2018-19 was largely due to the steep growth inUnified Payments Interface (UPI), it added.
"In India, the smartphone revolution has seen anexplosion in digital payment options, from e-Money to the Unified PaymentsInterface (UPI) to a combination of the two. After demonetisation, the use ofe-Money picked up on a very large scale," the findings showed.
The digital landscape changed with higher usage of e-Money,UPI, Aadhaar Payments Bridge System (APBS), RuPay, and Bharat Bill PaymentSystem (BBPS), among others.
With 3,459 million e-Money transactions, India was onlybehind Japan and the US (data on China not available) in 2017 with respect tovolume of e-Money transactions, the report said.
The study revealed that over the years, the number of debitand credit cards also increased considerably in India.
India had 331.60 million and 19.55 million debit and creditcards respectively at the end of 2012. The numbers grew to 861.7 million and37.49 million respectively at the end of 2017.
By March 31, 2019, the number of debit and credit cardsissued were 925 million and 47 million, respectively.
However, the study showed that the cost of digitaltransactions 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.