Even as digital payments took a dip during the period of virtual standstill amid the COVID-19-led lockdown, retail digital payments for the fiscal year 2019-20 saw 70 percent year-on-year growth touching $520 billion. The share of such payments amounts to nearly 20 percent of the gross domestic product (GDP), as against 5 percent of GDP three years ago, as per a report by Morgan Stanley.
The report noted that this exponential growth in digital payment trends is led by unified payments interface (UPI) coupled with continued strong traction in card payments. The share of UPI in overall retail digital payments stands at around 55 percent, with the report pointing out that a further spike in its usage is expected once a WhatsApp universal version is launched.
"The rising share of digital payments is also reflected in lower ATM withdrawals/Cheque Usage. ATM withdrawals grew 4% in F20 (~ 13% CAGR over past three years) and amounts to 17% of GDP," the report said.
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Even as traditional retail payment modes like credit and debit cards are losing their share in the overall picture, their year-on-year growth continues to be strong. Meanwhile the new-age digital payment options--mobile wallets, RuPay cards, etc-- are also gaining traction, according to the report.
Large lenders in India like HDFC Bank, ICICI Bank and even SBI have taken the lead in different modes. While HDFC Bank has shown strong market share gains with respect to digital transactions like National Electronic Funds Transfer (NEFT), SBI has posted strong gains with respect to mobile banking transactions. HDFC Bank has also shown higher and improving spends per debit card in the last fiscal.
However, after a temporary moderation in digital payment trends in April this year, there has been a recovery with the reducing impact of the nationwide lockdown in light of the COVID-19 pandemic. For instance, the report noted that UPI payments, after having declined 7 percent month-on-month in March and 27 percent in April, registered a strong rebound of 44 percent in May this year.
Also Read | Coronavirus pandemic: Digital payments fall up to 68% in April
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