Do you know which are the world’s largest countries with cashless transactions? Or, can you make a guess? OK, you don’t want to – understood!
Let me tell you. The tiny island nation of Singapore tops the list with 61% cashless transactions. In second place is Northern European nation Netherlands, with 60%. The third place is shared by France and Sweden, with 59% each.
Amongst the large countries, USA has 45%, Brazil 15%, Japan 14% and China 10%.
In India, the volume of cashless transactions was less than 2% before demonetisation and Modi Sarkar’s thrust on a cashless economy / digital payments. In financial year 2016-17, there were a total of 865.9 crore digital transactions across all banking platforms. This is a significant 340% rise from the 2013-14 number of 254.5 crore digital transactions. Within a period of 3 years, the amount of digital transactions has more than trebled up to 6.5%.
The present government has laid stress on the importance of adopting cashless methods of transactions, to ensure that every transaction leaves a trace. Citing how cash is also a potential contributor to amassment of black money, the Union government pulled out the ₹500 and ₹1000 notes of circulation in Nov 2016 (Demonetisation). Since then, several initiatives have been taken by the Modi government to encourage more people to adopt cashless methods of payment.Though wholesome digitisation of the economy is still a distant dream, the number of people conducting digital transactions throughout the country has definitely increased.
The government has repeatedly stressed on the importance of using mobile banking and has urged people to use their mobile phones for banking purposes. The government maintained that India’s 117 crore strong base of mobile phone users can do much better in terms of utilising mobile banking applications. The Bharat Interface for Money (BHIM) app, which enables users to make payments across bank accounts is a significant achievement for the cashless mission, already being downloaded by over 2.1 crore people. The Prime Minister’s website stated that over 72 crore transactions were done using mobile banking in 2016-17, compared to just 9.47 crore in 2013-14. The value of mobile banking transactions increased to ₹10,572 crores from just ₹224 crore in 2013-14.
Mobile banking has caught on very well with people, given how easy it is to conduct transactions using mobile phones and reduces dependency on physical bank visits or cash transfers.
Digital transactions in the country reached a record high of 111 crore in January 2018, up by 4.73% from the 106 crore mark touched in December last year. UPI-enabled transactions crossed the 15.17 crore mark in January 2018, undergoing a 4% increase from the 14.55 crore transactions clocked in December 2017.
The value of transactions also jumped by 18% from ₹1.31 crore in the last month of 2017 to ₹1.55 lakh crores in January, 2018. Of this, the government’s Bharat Interface for Money (BHIM) app accounted for over 95.7 lakh transactions worth upwards of₹365 crores. Over the last 12 months or so, UPI-based transactions have seen a massive 7000% increase.
As of March 2018, internet, mobile banking and PoS transactions combined stood at 37% for SBI, while they were only 31% in the year-ago period. If ATM and Business Correspondents are also included it goes up to 80%. With 6.10 lakh PoS terminals, SBI now commands a 20.2% market share in the segment.
There has been a surge in the number of PoS machines since demonetisation was announced by PM Modi in November 2016. Their number has gone up from 13 lakh before demonetisation to 32 lakh by end of April 2018, and is expected to touch 50 lakh by the year-end, thanks to a region-specific push by banks.
For ICICI Bank, the share of digital channels such as Internet, mobile banking, PoS and call centre in total savings transactions increased by 82% in the last financial year. The bank has on-boarded 250 corporates on its blockchain platform for domestic and international finance as part of its digital drive. All this has meant declining footfalls at the branches of these banks. For example, branch-based transactions in SBI declined to 20% in FY18 compared to the previous fiscal year. A look at other banks’ data on the share of digital transactions or other parameters such as increase in quantum of payments made through Direct Benefit Transfer shows that this is a common trend. For instance, Punjab National Bank reported a steep increase in Aadhaar-based DBT payments through NPCI up to March 31, 2018.