Dhanteras brings sparkle to digital gold sales, surge by 62% in October

Rising popularity

The sale of digital gold through payment apps such as Paytm, PhonePe, Jar, Amazon Pay, Google Pay and Tanishq has been steadily rising all year, going up from Rs 762 crore in January this year to Rs 2,290 crore in October.

The number of gold purchasing transactions also rose from over 103 million in September to 116 million in October, a 13 percent rise.

The rise in gold price and its role as a safe haven, the ease of purchase and accessibility and more importantly, the fractional ownership drove the customers' interest in digital gold. Customers can buy gold from Re 1 to around Rs 2 lakh per day.

Regulatory uncertainty

Earlier in November, the markets regulator, Securities and Exchange Board of India (SEBI), warned investors that digital gold is not regulated by any organisation in the country.

Several social media influencers also warned customers against buying gold, citing that if the platforms selling digital gold shut down their operations, customers will find it difficult to withdraw their money/gold.

However, a couple of digital gold platforms told Moneycontrol that they have not seen any decline post the SEBI directive.

Who holds the gold for customers

Most fintech platforms sell digital gold as a savings or investment product. The gold value is tokenised by companies like MMTC-PAMP or SafeGold. Customers can sell the gold whenever they want.

Investing in digital gold entails GST, storage cost and platform fees. Meanwhile, Gold ETFs are mutual funds that invest in gold and offer the same fractional ownership with fewer charges, apart from being regulated by SEBI.

However, customers need to open a demat account to invest in Gold ETFs. This is akin to investing in the stock markets, hence a large majority of the users find it convenient to purchase digital gold over ETFs.