RBI should keep watch of India’s cashless tryst2 min read 09 Nov 2020, 09:18 PM IST
App-based payments look set for rapid expansion now that WhatsApp Pay has joined the fray online. If a market boom ensues, it might even have implications for monetary policy
Cash is not obsolete. If India had nearly ₹18 trillion worth of currency in circulation on the eve of demonetization in 2016, it has about 50% more four years later. But our economy has expanded, too, and cashless transactions over the internet finally look set for a boom in the post-covid era. After a long phase of beta testing, WhatsApp’s payment feature was given a go-ahead last week by the National Payments Corp of India (NPCI). The Facebook-owned chat platform must keep users of its new service under 20 million for now, though it has an overall domestic user base of some 400 million, many of them riveted to it. Its web sprawl could grant it an edge over India’s two main payment apps, Google Pay and Walmart’s PhonePe, each of which has an estimated 40% slice of a pie that can expand exponentially. These apps can transfer money among themselves, thanks to NPCI’s Unified Payments Interface (UPI), an enabler of inter-bank transfers. Last month, UPI set a record of over 2 billion transactions, worth nearly ₹3.9 trillion. As more Indians shop online, its adoption curve could steepen.