Digital economy remains a 'no-show' as transactions fails to gain momentum

After shifting multiple goalposts on demonetisation, the Government has finally zeroed-in on making India a more digital, or, a less cash economy. 

So much so, that various prizes have been announced for people using digital currency in place of cash to conduct transactions. The Reserve Bank of India (RBI), on its part, has been releasing data on a daily basis to show how Indians are warming up to the idea of digital currency with each passing day. 

As per RBI, in the month of November 2016, a total of 671.5 million transactions took place with a total value of Rs 94,004.2 billion. 

However, between December 1 and 14, the number of transactions stood at 415.1 million with money spent to the tune of Rs 42,161.4 billion. 

The above chart is based on the Volume of modes of transaction used for electronic payments as on December 14 (except debit/credit cards as on December 13).

As per today's data, the volume of debit cards and credit cards at POS has been declining since the beginning of the month. On December 13 (the latest data) showed that 7.3 million debit/credit cards were used at POS, while on December 1, 8.6 million plastic money were used.

Following the drop in volume, a significant decline was seen in value terms too. On December 1, a total of Rs 14.6 billion was collected via the usage of plastic money. However, on December 13, only Rs 10.7 billion was collected.

In the month of November since the announcement, the 205.5 million debit/credit cards were used at POS, taking the total value at Rs 352.4 billion. 

Moreover, post the announcement, the banks (mainly private banks) are promoting Mobile banking systems to avoid the rush outside the banks. In the month of December, the payments done via mobile banking has also witnessed a sharp decline.

In terms of volume, on December 1, the mobile banking stood at 2.8 million which dropped to 2.3 million by December 14. Similarly, in terms of value, the payments done via mobile banking on December 1 was Rs 49.3 billion which declined to Rs 45 billion on December 4. 

Here, the Mobile Banking figures are taken from five banks. 

Further, the government has been saying that their principal objective is to curtail the use of physical currency. Following them, the banks have also started introducing Unified Payments Interface (UPI) applications give another push towards digitalisation.

Since 38 days (approximately) of the announcement, the UPI payment system is still struggling to hold place among the other payment transaction channels. This could be seen in the chart above.

However, where the other payments mode are seeing a drop, the UPI is witnessing an upward trend in terms of value and volume both. On December 1, in terms of volume 29 thousand times UPI system was used to make payment which in terms of value was Rs 10.3 crore. On December 14, in terms of volume it jumped to 71 thousand and touched 25.2 crore in terms of value.