Delhi: Three years after demonetisation and despite government's efforts to drive digital payments in India, more than 90 per cent of transactions are still made through cash, according to a new report by European payment services provider Worldline. In tier three and below cities, a case can be made that all transactions are made through cash. This may improve over the years but it will likely be a slow crawl,' said Worldline in its latest India Digital Payments Report. The growth of e-commerce, policy reforms to drive digitisation and financial inclusion, increased penetration and usage of smartphones and internet are driving the mobile wallet market in India. But the number of transactions done on mobile wallets in this quarter of this year was 104 crore, an increase of just five per cent over Q3 of the previous year. At the same time, the value of transactions on mobile wallets in Q3 2019 was Rs 46,600 crore, showing an increase of only two per cent over Q3 of 2018. The growth of mobile wallets has not taken off much following the emergence of unified payments Interface (tJPl). Its struggles come in direct proportion to the unprecedented growth of UPI, said the report.
The transactions done using mobile wallets in Q3 2019 (Rs 46,600 crore) are only 10 per cent of the size of the total transaction value on the LIPI platform (Rs 4.6 lakh crore). Significantly, India has 88-9 crore credit and debit cards but only 45.9 lakh point of sale (POS) terminals. Though POS terminals are increasing at a steady pace, said the report, India still has a long way to go to cater close to 90 crore cards in circulation. While the number of card transactions done at merchant locations is on the up, ATM withdrawals data suggests that cards are being used for withdrawing cash in a big way. This is likely because there are little to no avenues for them to use their cards or other digital instruments, said the report .
The challenge is to move ATM withdrawals (especially for Pradhan Mantri Jan Ohan Yojana account holders) into digital payment transactions which fit into the national agenda of going digital' The report said some of the key hindrances to the growth of digital payments are the higher cost of acceptance infrastructure, lack of financial literacy among smaller merchants, the high propensity of households to save in cash and the unorganised cash- intensive small and medium enterprises. We have seen that despite the push from the government to increase awareness about digital payments along with the sustained effort by banks to enrol merchants to join the digital payments platform, cash is still king: However, the average ticket size on POS terminals for credit card transactions in Q3 2019 was Rs 3,324 and Rs 1,357 for debit card transactions. In addition, the transactions at POS terminals increased from 150 crore transactions in Q3 2018 to 180 crore transactions in Q3 2019 up by 18_3 per cent. At the same time, the value of transactions at POS terminals increased from Rs 2.8 lakh crore in Q3 2018 to Rs 3.5 lakh crore in Q3 .
2019 was Rs 3,324 and Rs 1 ,357 for debit card transactions. In addition, the transactions at POS terminals increased from 150 crore transactions in Q3 2018 to 180 crore transactions in Q3 2019 up by 18.3 per cent. At the same time, the value of transactions at POS terminals increased from Rs 2.8 lakh crore in 03 2018 to RS 3.5 lakh crore in Q3 2019 up by 23.2 per cent. The report said while 30 per cent of transactions done on POS terminals were done using credit cards, they accounted for 51 per cent of the total value spent on POS terminals. This is likely because most Indian consumers use credit cards for purchasing high-value items. Building a ubiquitous and sustainable merchant acquiring ecosystem with asset lite infrastructure for digital payments is thus essential to the cause of creating a cash-lite society, said the report.