NPCI CEO A.P. Hota says number of digital transactions declining

New Delhi: With increase in the supply of cash in the economy, digital transactions have started to decline, according to Reserve Bank of India (RBI) data.

Inclination to use digital transactions has not happened as effectively as we had thought of, so we will have to do something about it, said A.P. Hota, managing director and chief executive officer of the National Payments Corp. of India, or NPCI.

Hota spoke to Mint during an event organized by NPCI on Thursday to announce the acceptance of JCB payment cards at ATMs and point-of-sale (PoS) terminals in India. JCB is a global payment brand and a credit card issuer and acquirer in Japan.

“It is a fact that lot of cash has come to the market. People who had adopted digital payment transactions out of no choice now have a choice to really use cash,” he said.

According to provisional data from the Reserve Bank of India (RBI), April saw total digital transactions of Rs109.58 trillion, down 26.78% from Rs149.58 trillion in March.

“Incentive programs are one of the promotional strategies that we are adopting. For example, in case of BHIM (Bharat Interface for Money) referral program, any referrer would get Rs10 and referee would get Rs25. This has already been launched by the Prime Minister himself to incentivise mobile payments,” said Hota.

Transactions across UPI hit 6.9 million in April—a record—against 6.2 million the previous month. In terms of value, there was around 8% decline, from Rs23.9 billion in March to Rs22 billion in April. Since December, UPI transaction volumes are up about 252%, said RBI data.

UPI transactions received major stimulus with the launch of BHIM app on 30 December.

“At present there is no special incentive for card payments but quite a good number of incentives continue. We are working out special packages for the RuPay cards in terms of education and widening of acceptance infrastructure,” he said.

Hota seemed positive about the lowering of merchant discount rate (MDR) charges in future to encourage greater adoption of card payments.

MDR charges used to be 75 basis points for transactions up to Rs2,000. Now, RBI has now made it 25 basis points for transactions up to Rs1,000, 50 basis points for transactions between Rs1,000 and Rs2,000 and 1% for transactions beyond Rs2,000, he added.

“There were no charges till 1 January and after that the reduced rates were applied till 31 March, which still continues as a temporary measure,” he said.

Debit and credit card usage in April at PoS machines declined by around 3.5% to 221.5 million transactions from 229.7 million in the previous month, RBI data showed.