Digital Payments to the Moon ??

Since the launch of National Financial Switch in 2004, Digital Payments have been dominating the industry with innovations such as BBPS, UPI, AePS & many more. In just 5 years, UPI has acquired 50.3% market share in terms of transaction volume & 2.8% in terms of transaction value.

RBI & NPCI has been instrumental in driving this path-breaking growth. But, there has always been a debate when it comes to measuring the extent of nationwide digital payments. Transaction volume & value were just the parameters of showing the customer adoption, but what about the infrastructure, performance of individual platforms or, even the quality of services.

To put an end to this debate, RBI constructed a new parameter that will consider all the independent variables which influence the digital payments ecosystem:

The DPI would be based on the above 5 categorical parameters and shall reflect accurately the penetration and deepening of various digital payment modes. The RBI-DPI has been constructed with March 2018 as the base period, i.e. DPI score for March 2018 is set at 100. Moving forward, the index shall be published on RBI’s website on a semi-annual basis from March 2021 onwards with a lag of 4 months.

In the past 2 years, we have observed an increase of 107.8% in the DPI which clearly shows tremendous growth in the Digital Payments Ecosystem. In the coming months, the whole industry would be waiting for the first semi-annual RBI DPI report, which will also highlight the impact of 2nd COVID wave on the cashless economy.

What's ahead for the Digital Payments Ecosystem:

1. Payments tech economy’s lifeline, vital for financial inclusion: RBI governor
2. Indian digital payments giant Paytm files for $2.2 billion IPO
3. BHIM UPI to be launched in Bhutan
4. Sorry, no Mastercard? Making sense of RBI's clampdown