Cashless economy: Miles to go as India crawls

India’s cashless economy remains a far-fetched dream even after two years of demonetisation.

Digital transactions, the motive behind Prime Minister Narendra Modi’s 2016 note ban, lagged behind in most of the past 22 months, data released by the Reserve Bank of India (RBI) showed month after month. The latest figures for September showed a 2% decline in overall electronic transactions from August. But the decline just doubled, at 4%, in September as compared to July.

The total digital transactions in September stood at Rs 227.9 lakh crore, down from Rs 232.4 lakh crore in August, according to the data. Electronic transactions in the country were worth Rs 237.5 lakh crore in July.

Digital space comprises credit and debit card translations and transactions through unified payments interface (UPI), unstructured supplementary service data (USSD), prepaid payment instruments (PPIs) and internet banking.

The data showed transactions had come down through all these modes. The RBI statistics covers the methods of payment used in retail transactions across the country.

Transactions via credit card fell close to 4% in September compared to August, while transactions via debit card fell around 3%.

Buying and selling by PPI instrument fell by a whopping 38% in September from that of August, according to the data.

Transactions through mobile wallet, too, came down by over 3%. Usage of PPI, such as mobile wallets, had seen an increase in the beginning of the year. Thereafter, these transactions have been on a decline. According to analysts, major mobile wallet companies may still be facing problems with their Know-Your-Customer (KYC) norms.

Credit and debit card usage at point-of-sale (PoS) machines, too, witnessed a decline in September and followed the past month’s trend. While credit card usage at PoS came down by nearly 4%, that of debit card usage at PoS was down more than 6%.

Digital transactions fell in terms of volume as well as their value, the data showed. Although there was no mention of UPI transactions in September, previous data showed they have received a boost after BHIM app was launched by the prime minister a month after demonetisation.

An earlier data had shown that UPI transactions had crossed two billion till the end of October, transferring a total of Rs 3.42 lakh crore.