Digital payments reach close to 46 billion, surpassing the target for fiscal 2020
Digital transactions in India has seen a surge of 4,572 crore, or close to 46 billion, surpassing the target for fiscal 2020, according to a letter from the ministry of electronics and information technology. Overall transactions grew 46 per cent over the previous year, reiterating the focus on digital payments, which the government has been pushing since demonetisation in 2016. The target set by the government for fiscal 2020 was little over 40 billion transactions, which was exceeding by 14 per cent.
The target for the current fiscal is over 46 billion transactions, according to a person aware of the matter. This is largely due to the effect of the pandemic, which has already impacted remittances even though payment networks like Unified Payments Interface (UPI) have bounced back to pre-Covid levels, while other instruments like IMPS are also staging a steady comeback.
Meity, which also shared a 'scorecard' on the performances in terms of digital payments, said the top five lenders were ICICI Bank, HDFC Bank, Yes Bank, IndusInd Bank and Fino Payments Bank. Fino is the only payments bank among the top league of banks. For the private bank majors, all three - ICICI, HDFC and Yes Bank - are top banking partners of leading payments platforms on UPI like Google Pay and PhonePe. UPI has recorded 1.34 billion transactions in June.
Amid the social-distancing norms, digital payments are expected to see wider adoption. However, the payments industry has been reeling under pressure with the government making the merchant discount rate (MDR) zero. MDR is a fee to facilitate online payments and industry executives said it is critical to keep this charge to build sustainable businesses. Last week, National Payments Corporation of India (NPCI) chief Dilip Asbe said they had initiated a discussion to bring a reasonable charge on the payments network.
Digital payments cover card-based transactions, IMPS, digital wallets, UPI, national automated clearing house (NACH) and Aadhaar-enabled payment system (AePS). Last year, regulatory bodies like the RBI, Irdai, and Sebi had proposed regulatory sandboxes to work and test new technologies in the market to scale up digital payments.