After it failed to meet the digital payments target last year, the government has asked all payment companies and banks to increase 50 per cent digital transactions in the current fiscal.
The ministry of electronics and information technology (MeitY) through a letter has set a target of 30 billion transactions- 23.7 billion transactions to be recorded by the banking sector and rest 6.3 billion transactions to be done by payment wallets.
The move is after the country has fallen short of last year’s target by 18%, having clocked 20.3 billion transactions only, ET report said quoting people close the development. Last year, the target was 25 billion transactions.
Now, the govt targets 30 billion digital payments in FY 2018-19.
The govt has also asked banks that acquire merchants for digital payments to deploy a total of 20 lakh point-of-sale (terminals), the letter said. According to data from the Reserve Bank of India (RBI), the number of payment terminals doubled to 3 million from around 1.5 million before November 2016, when the government pulled back large value currency notes from the system. The target of the government is to have 5 million payment terminals by the end of this year.
Meanwhile, the new-age private banks like Yes Bank, IndusInd Bank, Kotak Mahindra Bank and RBL Bank, which have all exceeded goals set in the previous year, added MeitY, which hailed them as principal drivers of digital payment adoption.
However, according to industry experts, digital transactions are still restricted to urban areas mostly. Also with full KYC being mandated and strict data storage norms, Indian wallet companies are leading to drop in transaction volumes across sectors.
Currently, the modes of digital payments operation in the country include UPI, Aadhaar-enabled payment system (AEPS), digital wallets, IMPS and POS terminals.
The UPI-based (Unified Payment Interface) transactions have been growing continuously, reaching new heights every month.
In March, the volume of UPI-based transactions grew to 178.05 million, clocking a whopping value of Rs 24,172.6 crore. Besides, the number of banks live on UPI app also reached to 91.
Paytm had claimed that the number of UPI registered 33.3 per cent growth in February over the previous month. While the total UPI transaction at Paytm stood 51 million in January, it touched 68 million last month.
The Noida based company had integrated UPI on its platform in November last year.
Over the past couple of years, acceptance of digital payment modes has risen considerably. After demonetisation, usage of Paytm and other wallets registered hockey stick growth curve. Demonetisation and penetration of Internet have helped it to become the country’s second-most valuable online startup, with a valuation of around $10 billion, after Flipkart.
However, the scenario might not remain the same for long, especially after the arrival of global and deep-pocketed players like WhatsApp UPI, Google Tez and PhonePe amongst others.
With elections, when cash demand rises high, not far away, it would be interesting to see how the govt will meet the escalated target for this fiscal year.