Hopes on pushing the market with a demonetization effect, through a cashless economy is of-course nice to hear. Has it been effective? Yes, it is working…… but very slowly. It has to be agreed though there has been a heavy thrust for using Wallets, Non-UPI Banking apps and Aadhaar enabled payments, they are still to catch up, and even the usage of debit card has fallen. Majority of the UPI payments are through mobile and the overall Electronic Payments is Rs. 200 trillion in August this year, which shows an increase of 5% over the August 2016 figure, but is 0.7% lower than what it was at the peak period of demonetization, ie., December last year. Following graph shows the details.
The Demonetization publicised that mobile banking and wallets would take the place of normal payments system, but as on August 2017, mobile banking forms only 0.33% (ie., 799.13 billion) of total on line payments. Mobile wallets like Paytm, Mobikwik and those from banks form only 0.051% (Rs. 102.88 billion) of the total payments. This means that there is no change in the digital payments since August 2016.
Following table gives the details of RTGS, Clearing Houses, Settlements, Cheque Payments etc., which has shown an increase of 15% year on year this year.
Thus the overall attributes of Demonetization on payments system, could be summed as under:
- Transactions on National Automated Clearing House (NACH) -used by corporates and financial institutions to pay salaries
- Pensions and dividends -increased 20%.
- Among retail payments, newer systems like mobile banking and e-wallets covered traditional platforms like NEFT.
- The Bharat QR code and UPI transactions grew more than 100% on a smaller base. However, they have not spoilt NEFT’s share of 90% of the retail space during these two years.
- NEFT volumes increased 43% this August to Rs 12.5 trillion from Rs 8.7 trillion last year.
- An RBI report adds that transactions on eight e-wallets–including Paytm, FreeCharge, Citrus Pay and MobiKwik–went down to Rs 19 billion in February 2017 from Rs 21 billion in January, and they had only 18% of the total wallet space.
- Wallet companies have since become more protected about their transaction figures. “Paytm’s user base has increased from 150 million last November to over 270 million. There has been a 3.5x increase in transactions this October than that of last year.
- Mobikwik, has over 65 million app users, and the number has more than doubled from 30 million. Their average daily transactions has gone up from 1.5 million pre-demonetisation to 3 million post-demonetisation.
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