The month of March, in which the national lockdown began, saw a sharp rise in digital financial transactions countrywide, according to data accessed by The Indian Express.
According to the latest Reserve Bank of India (RBI) data, the total value of Real Time Gross Settlement (RTGS) transactions — the biggest online payment method offered by RBI — rose 34 per cent across banks to Rs 120.47 lakh crore in March 2020, as compared to Rs 89.90 lakh crore in February 2020.
The usage of cash and other cash-based services, however, dipped during the period, the data showed. Cash withdrawals from ATMs as well as usage of various cards (debit, credit) have also gone down significantly, banking industry sources said.
The spike in digital financial transactions during March 2020 became more evident during the third and fourth week when most multinational corporations and smaller companies started giving its employees the option of working from home, and adopted other social distancing norms, to check the spread of COVID-19.
Of the 552.26 crore digital transactions in March, the country recorded a total of 107.78 crore and 95.57 crore transactions in the first and second weeks, respectively. During the third and fourth weeks however, the number of such transactions rose sharply to 124.73 crore and 224.16 crore, the data showed. The government enforced a strict 21-day countrywide lockdown from March 24, and extended it last week till May 3.
Owing to the spurt in digital payments during the third and fourth week, March recorded a 15 per cent growth, compared to February 2020. The number of transactions per day also went up to 18.5 crore, compared to 16.8 crore and 16.2 crore in January and February, respectively.
“The spending on utilities grew by 53 per cent in March, as people were taking precautions and staying indoors. The spending on online groceries grew by as much as 18 per cent during mid-March as people started stocking up on essentials,” Harshil Mathur, Chief Executive Officer and Founder of Razorpay, told The Indian Express.
Transactions in the form of donations for non-profit organisations also saw a massive growth of 64 per cent between March 15 and March 30, as people contributed to relief work, Mathur said.
The National Payments Corporation of India (NPCI)-run United Payments Interface (UPI), which provides services to other payment apps like Google Pay and Walmart’s PhonePe among others, registered more than 125 crore transactions worth Rs 2.06 lakh crore in March.
The numbers, however, dipped slightly compared to February as there was a dip in economic activity, NPCI’s Chief Operations Officer, Praveena Rai, said.
“It was also because non-essential items were not being ordered by people via e-commerce. The digital payment methods are building up in certain categories that are relevant like supermarket and medical stores,” Rai said.
Of all the transactions, recharges and bill payments for mobile connections and direct-to-home, cable broadcasting services, utility and other service bill payments as well as retail banking transactions, accounted for the majority of the volume. Compared to February, the number of such transactions rose nearly 19 per cent on month in March to 288 crore.
NPCI-run Bharat Bill Pay was one of the beneficiaries, as it recorded 1.58 crore transactions in March as against 1.49 crore in February.
“In the current situation, we are not seeing discretionary purchases taking place. We are seeing transactions, which are focused on critical purchases. On the other hand, payments like those to the staff or workers in a small company and by families to their drivers and domestic help among others, are happening on UPI,” Rai said.
In the same period, transactions such as interbank withdrawal of cash through ATMs fell sharply as most people remained indoors.
Of all the ATMs operating on NPCI’s platform, interbank cash withdrawal fell nearly 13 per cent over month in March to 321.22 million transactions. The total value of transactions at such ATMs also fell 10.7 per cent on month to Rs 12,428.6 crore.
The usage of RuPay cards at Point of Sale (PoS) machines also fell nearly 20 per cent month-on-month in March to 59.85 million transactions. Compared to Rs 10,300 crore spent by RuPay card users in February, the total value of transactions fell sharply in March to around Rs 8,180 crore.
“While online transactions have shot up, we are seeing withdrawals from ATMs falling sharply. This could be because people’s requirements for cash have fallen since the spending is mainly on essentials and necessities,” a banker with a state-owned bank said.
Visa and Mastercard, the other two major platforms for debit and credit card usage, did not respond to queries from The Indian Express.
The lockdown stall has hit economic activity across the spectrum, reducing cash transactions while leading to a spurt in online transactions, a banker with a state-owned bank said. “This cash economy has completely stalled barring for activities like food, health and utility payments,” the banker said.
The number of ATM transactions in rural areas also fell as people avoided going to bank branches or ATM kiosks. The fallout of avoiding public places as well as machines, which are handled by multiple people, was also visible as the government’s Aadhaar Enabled Payment System (AEPS) saw a 16.1 per cent on month decline in the number of transactions, in March.
The government uses AEPS mostly for direct benefit transfer schemes. In March, the value of transactions done through AEPS fell to Rs 10,170.3 crore, from Rs 11,389.2 crore in February. The total number of transactions also fell to 18.1 crore during the period, according to the data.
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