The return of King Cash post-demonetisation has not diminished the use of non-cash modes of payment at all. In fact, whether it is e-wallets or mobile payments, credit cards or the unified payments interface (UPI, including the Bhim app), RTGS, NEFT or IMPS (all electronic funds transfers), almost all non-cash modes of payment have recorded a significant month-on-month increase.
Overall, May 2017 saw a 1.3 per cent jump in such transactions over April to Rs 111,09,970 crore (ie, Rs 111 lakh crore), which, when annualised, works out to more than 15.6 per cent growth. Even adjusting for the fact that May has one more day than April, the annualised growth rate is a healthy 15 per cent. (See table below)
The shift to non-cash modes is growing twice as fast as the gross domestic product (GDP).
What is interesting, though, is how choice is shifting between various electronic and digital modes month on month.
Among the fastest growing modes of payment are UPI, which grew a phenomenal 26 per cent in May over April and pre-paid instruments (ie, e-wallets like MobiKwik, Payzapp and Paytm), which grew 13 per cent. The Bhim app of UPI has had 20 million downloads, reports The Economic Times.
But mobile payments went over the moon. Values transacted zoomed by over 34 per cent in May. This suggests that mobile banking payments could well be in high growth mode. In May, mobile banking volumes soared to over Rs 1.94 lakh crore, higher than even the peak volume month of March (Rs 1.44 lakh crore).
RTGS, NEFT and IMPS reported month-on-month growth rates of 1.8 per cent, 2 per cent and 4 per cent respectively. These are terrific rates, when annualised. Credit and debit cards rose by 2.3 per cent over the month.
The only major non-cash instrument to degrow was cheque payments. Between April and May, the value of cheques issued fell by 3.5 per cent.
But this degrowth should actually strengthen the case for claiming that people are moving away from physical modes of payment (cash, cheque) to digital and electronic modes.
Whatever else demonetisation may or may not have achieved, the shift to digital modes of payment is clear.
[Copyright By R Jagannathan]