New Delhi: Digital transactions in September rose to the second highest monthly level by value since the government’s demonetisation exercise in November.

Transactions through digital means rose 13.5% to Rs124.69 trillion in September from Rs109.82 trillion in August, according to provisional data released on Wednesday by the Reserve Bank of India (RBI).

It’s the second highest total for a month since the 8 November demonetisation, which caused a cash crunch that forced consumers to turn to cashless payments. The highest was in March at Rs149.59 trillion.

The number of digital transactions fell marginally to 865.8 million in September from 883.4 million in August.

Digital transactions include those through credit and debit cards, the unified payments interface (UPI), unstructured supplementary service data (USSD), prepaid payment instruments (PPIs) and internet banking. Transactions across UPI reached a new peak in September. The transaction volume was 30.8 million, up 85% from 16.6 million in the previous month. The value of transactions rose around 28% to Rs5,293 crore in September from Rs4,127 crore in the previous month. Since December, the UPI transaction volume has risen more than 10-fold, according to the RBI data.

UPI is a payments system launched by National Payments Corp. of India (NPCI) that facilitates instant fund transfer between two bank accounts on a mobile platform, without requiring any details of the beneficiary’s bank account.

“UPI has started to overtake net banking as it is much a flexible money transfer platform than the latter. Most of the payment gateways have also introduced the option to pay via UPI along with other modes of payments and given the ease it offers while making payments, most people opt for it," said Rajesh Khanchandani, head-marketing, digital and business development at Bijlipay, a digital payment solutions company.

Transactions through UPI received a major stimulus from the government after Prime Minister Narendra Modi launched the Bhim (Bharat Interface for Money) app on 30 December. UPI was launched in August 2016 with 21 banks, and is currently being offered by about 55 banks. An upgraded version of UPI is expected to be launched soon. Also, usage of PPIs such as mobile wallets hit a new record in terms of the value of transactions. Transactions worth Rs2,759 crore were recorded in September against Rs2,722 crore in the previous month. However, the volume of PPI transactions fell marginally by 2.5% to 87.5 million in September from 89.7 million in August. The provisional data considers transactions of PPI issued by eight non-bank issuers for goods and services transactions only.

Debit and credit card usage at point-of-sale (PoS) machines declined both in terms of value and volume. The volume of transactions fell by around 5.7% in September to 229.2 million transactions from 243 million transactions in the previous month. The value of transactions fell marginally to Rs45,193 crore in September from Rs45,708 crore in the previous month. Card transactions of four banks have been considered by RBI. Payments using National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS) increased by around 4% and 2%, respectively, in September from the preceding month.

“We can say that the new normal which has been achieved in context of digital payments is much different from that of last year’s but the government has set an aggressive target of attaining 25 billion digital transactions by this fiscal end. There is a need for fundamental structural reform to ensure that every sector adopts digital payments. There’s no doubt that directives have been issued by the government but its implementation is still very low," added Khanchandani.

Earlier this year, the government announced the “DigiDhan Mission" to achieve a 25 billion digital transactions target, outlined in the Union budget for this fiscal year.

The programme aims to establish a robust digital payments ecosystem in a potentially transformative attempt to drain the swamp of illicit monetary transactions.

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