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Demonetization data: growth in digital transactions wasn’t exponential

There was appreciable, but not exponential, growth in digital transactions, if data from the Reserve Bank of India is to be believed. If you look at data Mobile Banking (5 banks), Debit and Credit card transactions (4 banks, point of sale transactions only), Wallets / PPIs (only for goods and services), IMPS, NEFT, USSD, UPI, NACH (National Automated Clearing House), comparing the average transactions and amount-transacted per day for the 29-30 day reported period in December, and the month of November, growth in terms of volume of transactions was only 26.1%, and amount transacted declined 5.9%.

Note that the decline in average value of transactions per day was largely because of a 12.1% decline in value of NACH transactions, and excluding that, other modes of payment showed growth; it’s just that growth in digital payments during a month period when the government promoted its forced cashlessness was not exponential. Again, a caveat that the RBI is releasing incomplete data, so this analysis is indicative, but not necessarily subject to change once more data is available.

1. Debit and Credit card transactions: during the month of December, judging by data from point-of-sale transactions for four banks, an average of 9.9 million transactions per day were over the reported 29 day period, around 43.9% higher than 6.9 million transactions per day in November 2016. In total, over the 29 day period reported so far, around 285.9 million debit and credit card transactions were executed at PoS terminals for the four banks which the Reserve Bank of India has so far not identified. Historically, the RBI has released data for individual banks, but it’s possible that not all banks are geared up to release data on a daily basis.

In the same way, the amount transacted per day varied between Rs 1456 crore to Rs 1907 crore, averaging at around 1648 crore per day. Average amount transacted per day for the 29 days grew by 40.4% from 1174.5 crore per day for the month of November 2016. Note that these transactions are on a high base value, and thus even a 40% growth is substantive. It is improbable, however, that millions of users who used debit cards began using them at PoS terminals post demonetization.

2. IMPS: In case of IMPS, the number of transactions reported for a 30 day period ending 30th December 2016 were 47.2 million, averaging at around 1.6 million transactions per day. This is around 30.4% higher than November 2016, where around 1.2 million transactions per day were reported (around 36.2 million in total). Amount transacted increased much less: to around 380.6  million for the 30 day period reported, as compared to 324.8 million for the month of November. An average of 1268.8 crores were sent per day on an average, using IMPS, as compared to Rs 1082.7 crore per day for the month of November 2016. A growth of only 17.2%. Once again, the growth wasn’t exponential. .

3. PPI/Wallets: Transactions using Prepaid Payments Instruments (Wallets), for 8 non-bank wallets, for goods and services (and not money transfer) grew from 59 million in November 2016 to 78.1 million for the 30 day period till December 2016. That’s a 32.3% increase in transactions per day, to 2.6 million from 2 million. Average amount transacted per day increased 43.8% to Rs 63.3 crore from Rs 44 crore.

Again, these wallets haven’t seen an exponential growth in payments (not money transfer), although we don’t know which wallets specifically have been included by the Reserve Bank of India.

4. UPI: There has been significant growth in UPI, but that is largely because it is relatively new, as compared to other modes such as Debit and Credit Cards, IMPS and Wallets.

Usage of UPI grew to 1.676 million transactions for the 30 day period till December 2016, from 0.287 million in November 2016. That’s a 483% increase in transactions per day, to 0.056 million from 0.01 million. Average amount transacted per day increased 550% to Rs 19.59 crore from Rs 3 crore. It’s important to remember that this growth is on a low base, and is still a tiny fraction of transactions using other methods of payments.
5. NEFT: An anomaly in the digital world, and NEFT remains shut on the weekends, and appears to increase towards the turn of the month.

Average NEFT transactions per day grew 16.4% during the 30 day period ending 30th December 2016. Average transactions per day were 4.77 million, up from 4.1 million per day in November 2016. Amount transferred grew even less, up 8.7% to Rs 319 crore per day, from Rs 293 crore per day.

Note: We’ve not included USSD transactions because they are negligible, and NACH transactions because they’re not really a payment mechanism.

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