Year 2020 has nevertheless, been a bumpy ride for everyone. With the global pandemic hitting us and locking and limiting us to indoors, we evolved into a new normal to keep us functioning. Be it businesses or individuals, everyone bore the brunt and metamorphized into an alternative way of functioning. Where on one hand several sectors had to experience a massive downfall, quite a few businesses bloomed as well.
So what exactly went down in 2020 in terms of digital payments in India? Here’s a closer look.
Payments and settlement systems in India recorded a massive growth during 2019-2020, sprouting by more than 44 per cent in terms of volume topping the expansion by almost 60 per cent, and transaction value growing by 5.4 percent on top of 14.2 per cent in the previous year.
Among the electronic modes of payments, RTGS transactions expanded by 10 per cent, with their value touching more than INR 13 lac crores, where as, NEFT payments elevated by 18.3 percent in 2020.
2019-2020 also recorded a surge in card payments with credit card transactions increasing by 23.5 per cent and debit card transactions increasing by 16 per cent, with the value being INR 7.4 lac crores and INR 8 lac crores, respectively. The card acceptance infrastructure also witnessed a substantial growth where number of POS terminals deployed increased by 38.2 per cent.
Coronavirus also added another dimension to the digital, contactless payments. Contactless and digital payments grew almost 15x in the country in the last 18 to 20 months. With about 25 per cent cards being contactless and 15 per cent transaction value coming from them, RBI realised the propulsion in adoption of card payments thereby, augmenting the tap and pay limit from INR 2000 to INR 5000 without PIN from January 1, 2021.
To give boost to digital payments and making toll collection seamless, government made FASTag mandatory from January 15, 2020. FASTag is an electronic toll collection device affixed on the windshield of a vehicle, allowing automatic deduction of toll when the drivers pass through the toll plaza. Toll amount is automatically deducted from a prepaid wallet or a bank account linked to the FASTag, encouraging e-toll collection and minimisation of cash usage. Government has also proposed to make FASTag compulsory for all four-wheelers from January 1, 2021, where the vehicle will attract a challan if not fitted with the same.
BBPS or Bharat Bill Payment System was rolled out by the Government which is an interoperable platform enabling customers to pay telephone, DTH, water, gas, electricity bill, etc. from one application with an aim to push digital payments. Within two years of its operation, BBPS has successfully recorded nearly 5 crore bills processed every month, on its platform.
UPI or Unified Payments Interface broke all records in 2020 where it scaled past INR 4 lac crores milestone in the month of December, as per NPCI. Where transaction volume stood at 2.23 billions in December, up from 2.21 billion in November, UPI recorded a year-on-year growth of 70 per cent in terms of volume and 105 per cent in value. Moreover, the number of banks live with UPI also increased from 143 to 207, around the year. The hike in transaction value and volume can be attributed to Covid as people avoided using cash and shifting to digital modes of payment.
In July 2020, a high level committee issued by RBI suggested payment companies to issue either UPI QR or Bharat QR, eliminating the usage of propriety or closed loop QR codes. It stated that all payment companies which have deployed a propriety QR across their merchant network shall shift to UPI QR or Bharat QR codes by March 31, 2022 as they are a hindrance to an open and interoperable payment ecosystem. RBI data also narrates that over 2 million Bharat QRs have been deployed in the market by acquiring banks, although the transaction volume of the same is around 250 million. The number of Bharat QR codes deployment increased by 74.6 per cent to 20.28 lacs at the end of March 2020.
Other major highlights of the industry:
- About 66.6 billion transactions worth USD 270.7 billion are expected to shift to cards and digital payments by 2023 in India. This shall further increase to USD 856.6 billion by 2030.
- In order to boost digital payments in India, government announced that all internet banking customers can make use of RTGS payment service, round the clock, seven days a week now.
- Where UPI took three years to touch one billion mark, it took one year for it to reach 2 billion. IMPS on the other hand , turned out to be the most preferential real-time payment service for remittances in P2P segment and cash management in B2B Segment. IMPS also showed a month on month growth of 14 per cent and 10.45 per cent in volume and value.
- RBI announced INR 500 crore fund to digitise small towns of the country which included- deployment of physical and digital POS infrastructure. RBI also predicted debit card usage at POS to be around 44% by 2021 and to have around 5 million active POS devices by 2021.
- India became the second largest online market with over 560 million internet users.
- Government mandated enablement of UPI and RuPay transactions for businesses with a turnover of INR 50 Crore or more by January 31, 2020. Non adherence to the protocol will attract a penalty of INR 5000 per day.
2020 might have been a dicey year but it certainly led evolution and adoption of several digital form of payments across the country. With the advancements and progress of the year in mind, we are eager to see what 2021 has in-store for us from the digital payments perspective.