Published
Jul 20, 2017
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India's transformation towards a digital economy sees only seven percent rise in card transactions

Published
Jul 20, 2017

Digital payments and e-commerce are on the rise but the increase in card transactions fails to match such growth.

Despite demonetisation last November, card payments have only risen by seven percent - Archiv


Transactions made digitally had increased by 23 percent in May when compared to the figures for last November, officials stated in a presentation given to the Parliamentary Standing Committee on Finance on the “Demonetisation and Transformation towards Digital Economy”.

Unified Payments Interface, a payment system launched by the National Payments Corporation of India experienced the highest growth as November 2016 saw one million payments made per day using the UPI service but this had skyrocketed to 30 million a day by May. UPI allows for multiple bank accounts to be routed through a single app for online payment. Other electronic fund transfer services also experienced growth with Immediate Payment Service (IMPS) almost doubling in size during the review period.

The review period started in November as that is when the government demonetised both 500 and 1,000 rupee bank notes in an attempt to rid the country of fake currency. The review found that during this time, it was online payment apps that rose in popularity and not plastic cards, the use of which rose by only seven percent.

The rise in online payment apps is in parallel with the rise of e-commerce in India. The two largest categories in e-commerce are currently fashion and technology. Therefore, there is a marked trend towards shopping for fashion and electronic goods online and paying with an online payment app.

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