A billion Indians march towards Digital Payments: NPCI

Digital Payment methods have gone beyond the rich or well educated in India, according to a study conducted by People Research on India’s Consumer Economy (PRICE) in partnership with the National Payments Corporation of India (NPCI).

PRICE collaborated with NPCI to conduct this study, in an effort to quantify the strides consumers in India are taking towards becoming a ‘less cash’ society. The study pointed out that while one out of two of India’s richest 20 per cent households use digital payment, an even better set of numbers played out in the disadvantaged sections of the society.

Around one out of four households, in the poorest 40 per cent also used digital payments. Additionally, there is a suppressed demand of people who say they desire to use it but need someone to show them how to, and a smaller group who used it earlier and discontinued.

PRICE is a ‘non-profit’ think tank and this study covered 5314 households across 25 states with a sample designed to represent states and households across the income spectrum, the survey was aimed at understanding the awareness, adoption and use behaviour of households with respect to digital payments. NPCI is an initiative by Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) for operating retail payments and settlement systems in India.

If this ‘ready’ demand is enabled through effective training and education, then over half of all Indian households (54 per cent or 151 million households) will become digital payment users, according to the survey. Around 55 million of these households will come from the poorest 40 per cent of Indian households, 61 million will come from middle India or middle 40 per cent income band and only 36 million will come from the richest 20 per cent.

The report also points to the fact that thatsmart phone ownership is no longer a bottleneck for the adoption of digital payments with 68 per cent of the respondents (those in charge of looking after banking and payment work for the household, typically the Chief Wage earner) owning smartphones. As expected smartphone usage is near universal at 90 per cent for the richest 20 per cent of Indian households, but as high as 57 per cent of India’s poorest households have a smartphone.

These findings offer a significant insight into the 1.2 billion Indians, with around 40 per cent of them not ‘literate’ in the conventional sense but who are aware of using a smartphone.

The report pointed out that a high level of awareness of UPI and payment apps and that households which are using Unified Payments Interface (UPI) as a platform may not be completely aware about interoperability of the platform. There is a potential to create the awareness that any bank or payment app can be used to make UPI payments to any UPI user and users should know their UPI ID.

The RuPay card volumes have also witnessed a rise not only in urban areas, but also in remote PIN codes that had hitherto remained silent. The study revealed that the banking system is also very well connected digitally to respondents via Aadhaar linkages and SMS facility even at the lower income groups. The report finds 87 per cent of the respondents are aware of the act that they get SMS from the banks, which gives them the confidence to manage their money safely. As per the report, the Direct Benefit Transfers (DBT) delivery system has worked exceedingly well for the respondents and got even better during lockdown as around 85 per cent of the households received DBTs on their bank accounts.

Praveena Rai, COO, NPCI said, “It is very heartening to see the results of the digital payment ecosystem that NPCI has enabled and nurtured. The report clearly establishes that in India, digital payments have gone well past the early adoption stage and have gained significant traction across the country, including the lower income groups. The demand and optimism towards digital payments by Indian households who have traditionally been strong votaries of cash energises us in our mission of touching a billion Indians through digital payment products tailored to their needs. We learn from the report that though smartphone ownership is high, there is still a significant chunk of consumers who do not as yet have them. At NPCI, we are working towards offering non-smartphone users a sustainable digital payment solution and provide them easy, safe and instant payments experience as well.”

Finance Minister Nirmala Sitharaman, in Budget 2021, announced multiple changes to the goods and services tax framework aimed at helping small and medium businesses to tide over pandemic-induced disruptions. Ravi Vishvanathan, CFO, PayMate is of the view that this will filip to fintechs providing digital payment services to small and medium businesses by liberally amending the tax audit turnover limit for them.

 

 

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