Card usage plunges after Demonetisation

The per value transcations of debit and credit cards at points of sale (PoS) terminals has declined post-demonetisation, suggesting the country has a long way to move from cash-based economy to a complete digital one, says a report. The debit and credit cards transactions at PoSes were worth Rs 352.4 billion in value terms in November and Rs 181.3 billion till December 13, compared to Rs 511.2 billion in October. The average transaction at PoSes was Rs 1,714 for November and Rs 1,643 for December compared to Rs 2,229 in October, says an SBI Research report. "The per value transaction declined in post demonetization, which may be due to less number of PoS machines in the country compared to the demand," says the report. It said the country has 15.1 lakh PoS machines but may need an additional 20 lakh more if digitisation has to gain traction. The report says looking at the usage of debit cards only on PoSes, the numbers are still a long way to go. As of October, per debit card transaction at PoS was Rs 1,500 only, and the number of times transacted was only 1.3. "Thus on an annualized basis, debit card transaction is around Rs 24,000," it said. It said the government should thus incentivise the usage of debit card (there are 74 crore debit cards in use) on PoS by giving tax concession like 80C. The per transaction value of pre-paid instruments (PPIs) including m-wallet also declined post demonetization. "This decline is possible due to the fact that still customers are not comfortable in using m-wallets either due to lack of security or trust or awareness," the report said. The report, however, said the mobile banking transaction data indicates a huge success, with total volume through mobile banking increased by 9.7 per cent month-on-month to Rs 1245 billion in November 2016. The per transaction value increased by a whopping Rs 17,207 in November from Rs 14,536 in October. The report said the current size of digital banking including credit card and debit cards through PoS terminals, transaction through PPIs like m-Wallet, PPI cards and mobile banking is around Rs 1.7 trillion. This size has to increase from the current level to atleast Rs 3.5 trillion which is a conservative estimate of the gap between the actual currency in circulation and required currency in circulation. It said there is a need to ensure that per mobile banking transaction increases from the current level of Rs 14,500 to Rs 25,000 monthly. And therefore to fully utilise the potential residing in the digital channel, banks also need to focus on PPIs particularly on mobile wallets. Mobile wallets transactions need to increase from current level of Rs 34 billion to around Rs 100 billion going forward. "This means that value per transaction is increasing significantly from current level of mere Rs 475 to around Rs 1000," the report concludes.

Over 70% rural citizens have adopted e-wallets
More than 70 per cent of rural citizens have adopted the methods of e-wallets followed by Unified Payment Interface (UPI) payment option, the Electronics and IT Ministry said today. "An overview of the current data available with the Ministry of Electronics & IT (MeitY) shows that more than 70 per cent rural citizens have adopted the methods of e-wallets, 16 per cent opted for Unified Payment Interface (UPI)," the ministry said in a release. Rest of the people looked at Unstructured Supplementary Service Data (USSD), Adhaar Enabled Payment System (AEPS) & Cards or Point of Sale(PoS). Similarly, more than 85 per cent of the merchants have adopted the e-Wallet system and 13 per cent have opted for UPI, the statement said. "The speed and scale at which digital transformation in taking place in India is paving the way for a digitally empowered, participative and inclusive society," MeitY Secretary Aruna Sundararajan said. Under its Digital Payments awareness and training programme, the Ministry said that Common Service Centre (CSC) network, which provides government service in rural area, has enrolled over 25 lakh rural citizens for digital payments. "Achieving the 25 lakh mark in such a short time is an indication of the pace at which digital adoption is gaining momentum among rural citizens," Sundararajan said. Over 55,000 merchants have started offering digital payment options to rural customers across various districts and blocks in India," the statement said. The DigiDhan Abhiyan aims to reach over 1 crore rural citizens through this massive outreach programme. The campaign aims to cover 2 lakh Common Service Centres (CSC) in rural and semi-urban areas and also reach out to 2.5 lakh Gram panchayats across the country. The centres will cover one member from each household and will cater to 40 households in a catchment area.