The Reserve Bank of India (RBI) has introduced a Digital Payments Index (DPI) to capture the scale of adoption across various digital payments platforms and their performance over several parameters. The central bank had earlier announced that the DPI would be made available from July 2020 onward, but it only released the framework for the index on January 1, 2021. Like other indexes, the base year for the DPI has been set at 100 as of March 2018. As the adoption and use of digital payments has grown significantly since then, the DPI as of March 2019 stood at 153.47 and as of March 2020 stood at 207.84, indicating significant growth over a two year period. The DPI will be based on five major parameters, each with their own sub-parameters. These include: Payment Enablers (25%): Internet, Mobile, Aadhaar, Bank Accounts, Participants and Merchants Payment Infrastructure – Demand-side factors (10%) Debit cards, Credit Cards, Pre-Paid Instruments, Mobile and Internet Banking and FASTag Payment Infrastructure – Supply-side factors (15%): Bank Branches, Business Correspondents, ATMs, Point of Sale terminals, QR Codes and Intermediaries Payment Performance (45%) Payment Volumes, Payment Value, Unique Users, Paper Clearing, Currency in Circulation and Cash Withdrawals Consumer Centricity (5%): Awareness and Education, Declines, Complaints, Frauds and System Downtime The decision to introduce a DPI will help track the rate at which digital payments adoption grows across the country, however there are two aspects of the index that may require further debate: The first is that customer related issues being…
